S.N. Prasad, J.@mdash1. Heard learned counsel for the petitioner, Mr. Amit Pattnaik, Addl. Government Advocate, Mr. S.D. Das, learned A.S.G.I. and Mr. G. Mishra, learned advocate for O.P. No. 2.
2. The petitioner being aggrieved with the notice dtd. 31.12.2010 (Annexure-9) by which the relaxation granted under the provision of Para 79 of Employees'' Provident Funds and Miscellaneous Provisions Act, 1952 has been withdrawn and against the consequential order dtd. 10.1.2011 (Annexure-11) directing the petitioner to comply the conditions as an un-exempted establishment has approached this court.
3. Brief facts of the case is that being a Cooperative Bank having its area of operation within the undivided Sambalpur District registered under the Cooperative Societies Act, which is coming under the purview of the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as ''the Act, 1952'') with effect from 31.1.1996 including all its branches and departments by giving P.F. Code No. OR/491 dtd. 11.10.1966.
The petitioner - Company had submitted an application U/s.17 of the Act, 1952 before appropriate Government for exemption. When the application u/s. 17(1) of the Act, 1952 was pending, demand was raised, which was challenged before this court vide OJC No. 1054 of 1978, disposed of on 9.2.1987 with a direction to the opposite party No. 2 to decide the application filed U/s.17(1) of the Act within two months from the date of receipt of order of the court with a further direction that till the final decision is being taken by appropriate Government U/s.17(1) of the Act, no action shall be taken as contemplated vide Annexure-9. Thereafter the petitioner - Bank has prepared a declaration of trust deed which was duly executed on 15.4.1987 which is a condition precedent for grant of exemption U/s.17(1) of the Act. During pendency of the application filed by the petitioner U/s.17(1) of the Act, 1952, the Commissioner in exercise of power conferred under para 79 of the Act, 1952 has granted relaxation subject to fulfillment of conditions mentioned in Sl. Nos. 1 to 31 vide letter dtd. 7.8.1987. The government vide notification dtd. 30.10.2003 published in the Official Gazette has come out with the revised condition of grant of exemption U/s.17 of the Act, 1952 as contained in Appendix ''A'' para 27 AA and according to the petitioner he is fulfilling all the conditions laid down therein but after lapse of 25 years, i.e. on 6.8.2010 a letter has been issued by opposite party No. 3 regarding withdrawal of relaxation from the operation of Employees'' Provident Fund Scheme, 1952 granted under para 79 of the Scheme relying upon the audit report-cum-financial statement of the Board of Trustees of the year 2008-09, the investment pattern is not in conformity with the prescribed pattern. After receipt of letter as contained in Annexure-8 the Audit Squad of E.P.F. organization caused an inspection but no result has been communicated to the petitioner regarding the outcome of that inspection. The relaxation has been re-called by the authority on the allegation that the petitioner has violated the terms and conditions of Sl. Nos. 17 and 24(c) and in spite of repeated opportunity offered by the authorities the establishment has failed to comply as per the statutory provision and conditions of grant of relaxation. The petitioner after receipt of the notice dtd. 31.12.2010 has tried to satisfy the authority that there is no violation of the terms and conditions laid down under condition Sl. Nos. 17 & 24(c). The petitioner had tried to convince the authority that although there is some deviation so far as condition No. 17 is concerned, but for that reason the relaxation granted to the petitioner - establishment cannot be recalled because condition No. 17 also prescribes that in case of violation by the Board of Trustees in investing the monies of the Provident Fund as per the directions of the Government, the Government shall make the Board of Trustees separately and jointly liable to surcharge as may be imposed by the Central Provident Fund Commissioner or his representative, hence even assuming that there is violation of condition No. 17 the government could have imposed surcharge but that has not been done.
4. So far as non-compliance of condition No. 24(c) is concerned it has been submitted that the same has also not been violated because the Auditors have not been appointed for two consecutive years within the block of six years. It has been submitted by learned counsel for the petitioner that the authorities have recalled the relaxation granted to the petitioner - establishment without application of mind and without any cogent reason.
5. It has been submitted that before taking adverse decision the petitioner has not been provided with any opportunity of being heard which is more important for considering the fact that the appropriate Government has not taken any final decision on the exemption application filed U/s.17(1) of the Act, 1952 while this court has specifically directed in writ petition being OJC No. 1054 of 1978 to take decision within period of two months and awaiting for the final decision the relaxation has been granted by the competent authority in the year 1987 and for the last 23 years no complaint ever been made against the petitioner - unit hence the petitioner ought to have been heard before taking adverse decision.
6. It has been contended that the petitioner has not violated any condition and also the condition No. 17 and 24(C) and to that effect the petitioner had tried to satisfy the authorities by way of filing reply after the impugned order has been passed but it has not been considered by the authorities and without considering Anexure-11 dtd. 10.1.2011 has been passed.
7. It has been contended that it is settled principle that once the right has been accrued by passing an order by an authority under the statute before taking away the said right, it is the duty of the authorities concerned to at least provide an opportunity of being heard.
8. The opposite parties have appeared and filed detail counter affidavit contesting the case by vehemently opposing the contention raised by the petitioner and argued that the application U/s.17(1) of the Act, 1952 has been filed by the petitioner - establishment before appropriate Government and during pendency of the said application relaxation has been granted by the competent authority in exercise of power conferred under para 79 of Employees'' Provident Fund Scheme, 1952 subject to fulfillment of certain conditions laid down in the relaxation order and also after amendment the condition contained in Appendix ''A'' of para 27 AA of the Employees'' Provident Fund Scheme, 1952. It has been argued that when the relaxation has been granted in exercise of power conferred under para 79 of the Scheme, 1952, subject to fulfillment of some conditions and the petitioner has given undertaking to fulfill all such conditions hence it is the duty of the petitioner - establishment to fulfill all the conditions but the petitioner - establishment has not fulfilled the condition as given under condition No. 17 and 24(c) of Appendix ''A'' of para 27 AA of the Employees'' Provident Fund Scheme, 1952 and as such the competent authority has recalled the order of relaxation.
9. It has been argued that the Employees'' Provident Fund Act, 1952 is purely a beneficial legislation, so enacted with the main objective of making some provisions for the future of industrial workers after their retirement and for their dependents in case of death. Hence it has been submitted that the petitioner - establishment since violated the terms and conditions of the relaxation, the competent authority has recalled the privilege of relaxation and treated the petitioner - establishment as an un-exempted unit. Hence there is no infirmity in the decision taken by the authorities.
10. Learned counsel for opposite parties at this juncture has submitted that the petitioner can still approach to the authorities by producing relevant document and if he will approach with the relevant documents, his case will be considered.
11. Heard learned counsels for the parties. In order to appreciate the issues involved in this case it is relevant to see the relevant provisions which is necessary for proper adjudication of the issues involved in this case. The relevant provision which needs to be referred here is Sections 17, 27 AA and 79 which are being reproduced herein below:--
"17. Power to exempt
(1) The appropriate government may, by notification in the Official Gazette, and subject to such conditions as may be specified in the notification, [exempt, whether prospectively or retrospectively, from the operation] of all or any of the provisions of any Scheme:
(a) any [establishment] to which this Act applies if, in the opinion of the appropriate government, the rules of its provident fund with respect to the rates of contribution are not less favorable than those specified in section 6 and the employees are also in enjoyment of other provident fund benefits which on the whole are not less favorable to the employees than the benefits provided under this Act or any Scheme in relation to the employees in any other [establishment] of similar character, or
(b) any [establishment] if the employees of such [establishment] are in enjoyment of benefits in the nature of provident fund, pension or gratuity and the appropriate government is of opinion that such benefits, separately or jointly, are on the whole not less favorable to such employees than the benefits provided under this Act or any Scheme in relation the employees in any other [establishment] of a similar character.
[PROVIDED that no such exemption shall be made except after consultation with the Central Board which on such consultation shall forward its views on exemption to the appropriate government within such time limit as may be specified in the Scheme.]
(1A) Where an exemption has been granted to an establishment under clause (a) of sub-section (1),
(a) the provisions of sections 6, 7A, 8 and 14B shall, so far as may be, apply to the employer of the exempted establishment in addition to such other conditions as may be specified in the notification granting such exemption, and where such employer contravenes, or makes default in complying with any of the said provisions or conditions or any other provision of this Act, he shall be punishable under section 14 as if the said establishment had not been exempted under the said clause (a);
(b) the employer shall establish a Board of Trustees for the administration of the Provident Fund consisting of such number of members as may be specified in the Scheme;
(c) the terms and conditions of service of members of the Board of Trustees shall be such as may be specified in the Scheme;
(d) the Board of Trustees constituted under clause (b) shall-
(i) maintain detailed accounts to show the contributions credited, withdrawals made and interest accrued in respect of each employee;
(ii) submit such returns to the Regional Provident Fund Commissioner or any other officer as the Central Government may direct from time to time;
(iii) invest the provident fund monies in accordance with the directions issued by the Central Government from time to time;
(iv) transfer, where necessary, the provident fund account of any employee; and
(v) perform such other duties as may be specified in the Scheme.
(1B) Where the Board of Trustees established under clause (b) of sub-section (1A) contravenes, or makes default in complying with, any provisions of clause (d) of that sub- section, the Trustees of the said Board shall be deemed to have committed an offence under sub-section (2A) of section 14 and shall be punishable with the penalties provided in that sub-section.
(1C) The appropriate government may, by notification in the Official Gazette, and subject to the condition on the pattern of investment of pension fund and such other conditions as may be specified therein, exempt any establishment or class of establishments from the operation of the Pension Scheme if the employees of such establishment or class of establishments are either members of any other pension scheme or propose to be members of such pension scheme, where the pensionary benefits are at par or more favorable than the Pension Scheme under this Act,]
(2) --------------------------------------
Section- 27 AA. Terms and conditions of exemption- All exemption already granted or to be granted hereafter under Section 17 of the Act or under paragraph-27-A of the scheme shall be subject to the terms and conditions as given in the Appendix-A.
The following are the revised conditions for grant of exemption under Section 17 of the Act, 1952:--
1. The employer shall -------------------------------
17. The Board of Trustees shall invest the monies of the provident fund as per the directions of the government from time to time. Failure to make investments as per directions of the Government shall made the Board of Trustees separately and jointly liable to surcharge as may be imposed by the Central Provident Fund Commissioner or his representative. -------------------------------------------------
24(c) The same auditors should not be appointed for two consecutive years and not more than two years in a block of six years. -----------------------------------------------------
79. Special Provisions relating to factories and other establishments in respect of which applications for exemption are received.--Notwithstanding anything contained in this Scheme, the Commissioner may in relation to a factory or other establishment in respect of which an application for exemption under section 17 of the Act has been received, relax, pending the disposal of the application the provisions of this Scheme in such manner as he may direct."
12. Thus from perusal of condition contained in Sec.17 the appropriate Government has been conferred with the power to exempt any establishment subject to fulfillment of some conditions. The terms and condition of exemption has been revised by virtue of notification dtd. 4.5.2012 implemented w.e.f. 4.5.2012 lying down certain condition under Appendix ''A''. The provision has been made under para 79 of the Employees'' Provident Fund Scheme, 1952 conferring power upon the Commissioner to pass an order of relaxation pending disposal of application of exemption U/s.17.
Thus it is evident that U/s.17(1) the appropriate Government has been empowered to exempt subject to fulfillment of conditions and that condition has been amended vide notification dtd. 4.5.2012 as would be evident from Appendix ''A'' para 27 AA the Act, 1952. But however during pendency of the exemption application before the appropriate Government the Commissioner has been conferred power to grant relaxation to the establishment under para 79 of the Scheme, 1952. Thus it is evident that for granting relaxation the condition as laid down under Appendix ''A'' of para 27 AA is to be filled up by the establishment and only then the commissioner can pass an order of relaxation pending disposal of the application. In the light of this statutory provision now the case of the parties will have to be looked into.
13. There is no dispute that the petitioner - establishment is coming under the purview of the Act, 1952 and as such the application U/s.17(1) has been filed before the appropriate Government for getting exemption. While the application was pending, on the request of the petitioner - unit relaxation has been granted in view of provision as contained in para 79 of the Employees'' Provident Fund Scheme, 1952 vide order dtd. 1.7.1987, subject to fulfillment of 31 conditions w.e.f. 1st July, 1987. Subsequently by virtue of notification dated 29th October, 2003 the terms and conditions for getting exemption has been amended by making amendment under paragraph 27 AA of E.P.F. Scheme 1952 laying down altogether 31 conditions.
The petitioner although has given undertaking to abide by the terms and conditions governing the grant of exemption but on account of violation of the terms and conditions laid down at Sl. No. 17 and 24(c) during the period of relaxation which was found out by the Squad of officers who conducted audit of exempted establishments, the relaxation granted from the operation of Employees'' Provident Fund Scheme, 1952 has been withdrawn. The condition laid down under terms and conditions No. 17 and 24(c) is being reproduced herein below:--
"17. The Board of Trustees shall invest the monies of the provident fund as per the directions of the Government from time to time. Failure to make investments as per directions of the Government shall make the Board of Trustees separately and jointly liable to surcharge as may be imposed by the Central Provident Fund Commissioner or his representative.
24(c) The same auditors should not be appointed for two consecutive years and not more than two years in a block of six years."
14. The terms and conditions laid down under condition No. 17 requires the board of trustees to invest the monies of the Provident Fund as per the direction of the government from time to time. However, in violation of making investment as per direction of the government shall make the board of trustees separately and jointly liable to surcharge as may be imposed by the Central Provident Fund Commissioner or his representative. In this connection the petitioner who has given his reply as would be evident from reply dtd. 6.1.2011 annexed as Annexure-10 to the writ petition wherein the following replies have been given by the petitioner.
"....That as per Sl. No. 17 of the scheme, the monies of the trust is to be invested in the following manner.
As per report of the auditor [Chartered Accountants] the investment pattern of the trust in year 2009-10 are as follows:
The major portions of the investment pattern are complied except few deviations like State Government Securities and Private Sector Bonds. The only reason behind it that, the Govt. of Orissa has not floated the securities since last 4 to 5 years for which we have invested the said portion in Central Govt. Securities. So far investment in Private Sector Bond/Securities Deposits, we have exceeded the prescribed limit, which is being rectified within 15 days.
That, the trust has not deviated Sl. No. 24(c) of the scheme since the notification of the scheme in 2004 since the following auditors [Chartered Accountant] have not audited the accounts of the trust consecutively for 2 years in block of 6 years.
Hence, the notice communicated as referred above may kindly be reviewed and till then the modalities prescribed for transfer of monies held by our Trust may be stayed.........."
Thus it is evident from the reply that the petitioner - unit has defended so far as State Government Securities, Bonds/Securities of PFI and Private Sector Bond/Securities Deposits are concerned. However, some explanation has been given and the reason which has been explained is that since the Government of Orissa has not floated the securities since last 4 to 5 years for which the investment has been done according to the said proportion in Central Government Securities. But so far as the investment in Private Sector Bond/Securities Deposits the prescribed limit was extended as it will be rectified within 15 days. As such there is admission on the part of the petitioner - unit that the condition laid down under terms and conditions No. 17 has been violated.
However, in course of argument it has been argued by learned counsel for the petitioner that even accepting that the term and condition No. 17 has been violated but that cannot be taken as a ground to recall the privilege of relaxation since the Government has got power to impose sur-charge in case of violation of the conditions laid down in the condition No. 17.
15. So far as violation of condition No. 24(c) is concerned which stipulates that the same Auditors could not be appointed for two consecutive years and not more than two years in a block of 6 years but from perusal of the reply given by the petitioner which is reproduced herein above it is evident that the same Auditors have been appointed for two consecutive years in a block of 6 years.
16. However, learned counsel for the petitioner has argued that the condition as contained in condition No. 24(c) has not been violated but according to his interpretation the condition has been stipulated that the same Auditor could not have been appointed for two consecutive years in a block of 6 years but that interpretation cannot be accepted for the reason that from perusal of the condition as laid down under condition No. 24(c) that the same Auditors could not have been appointed for two consecutive years and not more than two years in a block of 6 years. As such this condition laid down two conditions:--
"(i) The Auditor should not be appointed for two consecutive years; and
(ii) The Auditor should not be appointed more than two years in a block of 6 years."
But from perusal of the reply it is evident that the Auditors have not been appointed for two consecutive years and not more than two years in a block of 6 years, hence the condition as provided under condition No. 24(c) has not been violated by the petitioner - establishment.
17. From the record it is evident that the petitioner - establishment has made an application U/s.17(1) of the Act, 1952 for getting exemption subject to fulfillment of certain conditions laid down in the statute, subsequently amended and contained in Appendix ''A'' of para 27 AA of Employees'' Provident Fund Scheme, 1952. The authorities when not taken any decision, the petitioner - unit was compelled to file writ petition way back in the year 1978 and this court after taking into consideration all aspect of the matter has directed the appropriate Government to take decision within stipulated period but till date no decision has been taken, however, exercising power offered under Para 79 of the E.P.F. Scheme, 1952 the competent authority has granted privilege of relaxation subject to fulfillment of conditions as stipulated, subsequently amended and contained in Appendix ''A'' of para 27 AA of the Scheme, 1952. The privilege of relaxation was granted in the year 1987 and from the record it appears that the opposite parties have not alleged any allegation save and except the violation of condition No. 17 and 24(C) alleged to have been committed by the petitioner - unit for the financial year 2004-05 which means that from the year 1987 till the financial year 2003-04 no complaint has ever been made against the petitioner - establishment. The opposite parties have passed the order impugned recalling the privilege of relaxation for violation of condition No. 17 and 24(c) of Appendix ''A'' of para 27 AA of the Scheme 1952.
18. The petitioner has tried to satisfy the authority by way of filing reply of course after the order impugned has been passed by submitting before them regarding alleged violation of condition No. 17 that it is due to beyond their control regarding not following the investment in the manner prescribed. However the justification has been given that the petitioner has tried to compensate by increasing the investment on another count.
19. Likewise regarding violation of condition No. 24(c) it has been submitted that there is no violation as because the auditors have not been appointed for two consecutive years and also not more than twice in a block of 6 years which prima facie seems to be justified from perusal of the reply which is part of the record.
20. The main contention of the petitioner is that before taking away the privilege of relaxation the authorities ought to have issued a show cause notice enabling him to convince that there is no violation of any of the condition including the condition No. 17 and 24(c) but since this opportunity has not been provided, the order of recalling privilege of relaxation is not proper.
21. Further even the authorities have not considered the reply/justification which the petitioner has submitted after decision of recall of privilege of relaxation has been taken away rather the authorities have come out with Annexure-1 dtd. 10.1.2011 to meet out the liability as an un-exempted unit.
22. The specific case of the petitioner is that prior to the notice dtd. 31.12.2010 no such opportunity has been provided to the petitioner as has been asked vide communication dtd. 10.1.2011 otherwise all the documents would have been submitted before the competent authority. Further it has been argued that once the relaxation has been given by the statutory authority in exercise of a statutory provision and remained in force for long period of 23 years, it cannot be withdrawn arbitrarily without giving any show cause notice.
23. I find substance in the argument advanced on behalf of learned counsel for the petitioner in this regard because admittedly the application for exemption has been filed by the petitioner and the same is still pending before the appropriate Government while this court has specifically directed the authorities to decide the application within two months but it is still pending and during pendency of the said application the relaxation has been granted vide order dtd. 7.8.1987 which remained in force for 23 years and during that period no complaint whatsoever has been made by the competent authority for violation of any terms and conditions as such before taking any adverse decision regarding recall of the privilege of relaxation as granted in exercise of power conferred under para 79 of the Act, 1952 it was the duty of the authorities to at least provide an opportunity of being heard by providing an opportunity to defend but that has not been done rather it is only on the basis of inspection report of an inspecting team notice dtd. 31.12.2010 has been issued recalling the privilege of relaxation which is in violation of principle of natural justice and it is settled that once any right has been accrued the same cannot be taken away without providing an opportunity of being heard otherwise the same will be said to be in violation of principle of natural justice.
24. Moreover, the opposite parties even have not taken into consideration the justification given by the petitioner denying the allegation of violation of any of the condition but that has also not taken into consideration which is evident from the communication dtd. 10.1.2011. It is further evident from the communication dtd. 10.1.2011 that time and again the reminder has been given to abide by the statutory provision within the relaxation period and to furnish written undertaking to the Regional P.F. Commissioner agreeing to abide by the condition which are specifically and legally binding but the contents of Annexure-11 dtd. 10.1.2011 cannot be accepted because nothing has been brought on record in the counter affidavit regarding such type of letters/reminders asking the petitioner to submit documents or the records prior to issuance of the impugned order.
25. There is no dispute that the Act, 1952 is a welfare legislation but it does not mean that the authority will take decision according to their whim and without any application of mind. When the statute has provided any power and right to the parties, the competent authority is supposed to take decision in accordance with law and merely on the garb of social welfare legislation the authority cannot be permitted to take whimsical decision.
26. There is no dispute about the contention of the opposite parties that the authorities empowered to grant relaxation has always power to recall it. But the thing which is important is that before passing any adverse order the competent authority is supposed to take decision with application of mind and after providing an opportunity of being heard to the parties who are going to be adversely affected.
The importance of following the principle of Natural justice in all Quasi judicial proceedings has been reportedly emphasized by the Hon''ble Supreme Court. The concept of reasonable opportunity includes the need for an individual to be told what the charges leveled against him is and the allegations on which charges are based. Mere reproducing the format of notice without mentioning the particulars on which the case is based is not proper. It is essential to state the particulars to enable the person to answer the charges against him.
Article 14 guarantees a right of hearing to the persons adversely affected by an administrative order. In the case of Daily Transport Corporation v. DTC Mazdoor Union, reported in , AIR 1991 Supreme Court 101 Hon''ble Apex Court has been pleased to hold that the audi alteram partner rule, in essence, enforce the equality clause in Article 14 and it is applicable not only to Quasi Judicial bodies but also to administrative order adversely affecting the party in question.
Similarly in case of Maneka Gandhi v. Union of India and another reported in , AIR 1978 SC 597 Hon''ble Apex Court has been pleased to opine that Article 14 is an authority for the proposition that the principles of natural justice are an integral part of the guarantee of equality assured by Article 14 and orders depriving a person of his Civil Right passed without affording him an opportunity of being heard suffers from vice of violation of Natural Justice.
Since prima facie it appears that the reason given in the notice regarding not following the conditions laid down at Sl. No. 24 (c) seems to be not correct which also suggests that the authorities have not applied their mind in a proper manner.
27. In totality of the entire facts and circumstances the notice dtd. 31.12.2010 is not sustainable and hence quashed.
28. In the result the matter is remitted before the Regional Provident Fund Commissioner to take fresh decision after providing an opportunity of being heard to the petitioner and simultaneously the petitioner is also directed to produce all relevant documents regarding fulfillment of terms and conditions laid down under Appendix ''A'' of para 27 AA of the Scheme 1952.
29. The competent authority will have the liberty to proceed ex-parte if the petitioner will not cooperate and take decision in accordance with law.
30. It is made clear that the entire exercise will be concluded within period of six weeks from the date of receipt of copy of this order.
31. It is made clear that the privilege of relaxation will depend on the final decision to be taken by the competent authority as indicated herein above.
Accordingly the writ petition is disposed of.
