Murali Purushothaman, J
1. The petitioner Co-operative hospital is an establishment covered under the provisions of the Employees Provident Fund And Miscellaneous
Provisions Act, 1952 (hereinafter referred to as “the Actâ€). The petitioner was issued with Ext. P1 communication by the 2nd respondent, the
Assistant Provident Fund Commissioner asking to appear for hearing on 29.10.2015 and to show cause as to why penal damages as stipulated under
Section 14B of the Act shall not be levied for the belated remittance of Provident Fund dues. The petitioner, vide Ext. P2 letter, requested the 2nd
respondent to postpone the hearing slated on 29.10.2015 on account of Municipal election. Ext.P2 was sent by registered post on 24.10.2015 by
courier service and Ext. P3 is the receipt and Ext. P4 is the delivery report issued by the courier service. Despite Ext. P2 request of the petitioner for
postponement of the hearing, the 2nd respondent proceeded with the matter and passed Ext. P5 order levying damages under Section 14 B of the Act.
In Ext. P5 proceedings, it is stated that although the petitioner was asked to appear on 29.10.2015 to provide an opportunity for a hearing, neither
representation nor a reply from the petitioner was brought to the notice of the 2nd respondent nor did anybody appear for a personal hearing and
therefore, it is deemed that the petitioner has no explanation to offer regarding the proposed levy, and left with no other option, ex parte proceedings
for the determination of damages are issued. Aggrieved by Ext. P5 proceedings, this writ petition is filed.
2. A statement has been filed on behalf of the respondents wherein it is stated that the petitioner did not appear for the enquiry which was slated on
29.10.2025 and accordingly, it was decided to conclude the enquiry on 29.10.2015 on the basis of available documents. Paragraph 6 of the statement
reads as follows:-
“It is submitted that the employer did not appear for the enquiry on 29.10.2015. It is stated in the assessment order itself that no request or representation for
adjournment was brought to the notice of the enquiry authority in reply to Ext.P-1 summons.â€
3. Heard Sri. Alias M.Cherian, the learned counsel for the petitioner and Sri. S. Prasanth, the learned standing counsel for the respondents.
4. Section 14 B of the Act reads as follows;
14B. Power to recover damages.-- Where an employer makes default in the payment of any contribution to the Fund, the Pension Fund or the Insurance Fund or in
the transfer of accumulations required to be transferred by him under sub-section (2) of section 15 or sub-section (5) of of section 17 or in the payment of any charges
payable under any other provision of this Act or of any Scheme or Insurance Scheme or under any of the conditions specified under section 17, the Central Provident
Fund Commissioner or such other officer as may be authorised by the Central Government, by notification in the Official Gazette, in this behalf may recover from the
employer by way of penalty such damages, not exceeding the amount of arrears, as may be specified in the Scheme:
Provided that before levying and recovering such damages, the employer shall be given a reasonable opportunity of being heard:
Provided further that the Central Board may reduce or waive the damages levied under this section in relation to an establishment which is a sick industrial company
and in respect of which a scheme for 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, subject to such terms and conditions as may be specified in the Scheme.
(underlining supplied)
Section 14-B involves imposition of penalty, which entails serious civil consequences. The 1st proviso to Section 14B provides that, before levying and
recovering damages for the default in the payment of contribution to the Fund, the employer shall be given a reasonable opportunity of being heard. It
is a statutory requirement. The principles of natural justice is explicit in the Section itself.
5. Exts. P3 and P4 indicate that Ext. P2 letter of the petitioner requesting an adjournment of hearing was received in the office of the 2nd respondent.
Despite this, the 2nd respondent proceeded with the matter and issued Ext. P5 order.
6. The statement filed on behalf of the respondents states that in the assessment order it is stated that no request or representation for adjournment of
hearing was brought to the notice of the 2nd respondent. However, there is no reply to the petitioner's claim that Ext. P2 request for postponement
was served on the 2nd respondent, as evidenced by Exts. P3 and P4.
7. Opportunity of hearing is an integral facet of the principles of natural justice. There is explicit provision in the Act for giving reasonable opportunity
of being heard to the employer before levying and recovering damages for the default in the payment of contribution to the Fund. Ext. P5 order is
vitiated by reason of the failure to grant reasonable opportunity of hearing to the petitioner. Accordingly, Ext. P5 order is set aside. However, it will be
open to the 2nd respondent to issue fresh notice to the petitioner to initiate proceedings for levying damages.
The writ petition is disposed of.
