# COAL MINES PROVIDENT FUND COMMISSIONER DHANBAD & OTHER v. J. LALA & SONS

- **Citation:** [1976] 3 S.C.R. 365
- **Court:** Supreme Court of India
- **Decided:** 1976-02-13
- **Bench:** A. N. Ray, M. H. Beg, Jaswant Singh
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/coal-mines-provident-fund-commissioner-dhanbad-other-v-j-lala-sons-6740
- **Pages:** 4

## Headnote

365
Coal Mines Provident Fund and Bonus Schen1e Act 1948 (XLVI of 1948)-
Seclion IOF and 78-Payn1e11t of dun1ages payable by the ernpioyer-W/lether
the Coal Mines Prorident Fund Con1nlissioner should give a11 hearillf? to the
en1ployer-Mea11i11g of the words '\wtch da1nages" ..... "as it 1nay think -fit to
.inipose".
Section 1 OF of the Coal Mines Provident Fund and Bonus Scheme
Act
1948 is a penal section ·under which for default in the payment of any Provi-
·dent Fund contribution, the Central Government
may
recover
from
such
employer or person as the case may bi!, such damages, not exceeding 25%
of the amount of arrears, as it may think fit to impose. ln respect of the
period from July to September, 1968, the respondent employer was asked to
pay a sum of Rs. 1455.50 as damages being 25o/o of the arrears of Provident
Fund contributions by the appellant to which he filed an objection explaining
the delay.
The employer's request for waiving the damages was negatived.
The writ application of the employer against that order was allowed by the
High Court on two grounds, riz. (i) that the computation of damages should
arise upon consideration of the facts and circumstances, and (ii) the authorities should have given an opportunity to the employer to represent
the
case.
Dismissing the appeal by special leave, the Court,
HELD: (1) The provisions contained in s. 78 of the Act indicate first
that the Coal Mines Provident Fund Commissioner may determine the amount
due from the employer, and seco_nd, for this purpose he may conduct such
enquiry as he may deem necessary.
Therefore, an enquiry is contemplated.
Section 78(3) speaks of reasonable opportunity being given to an employer
to represent his case.
The provision in s. 1 OF of the Act also indicates that
determination of damages is not a mechanical process.
The words of importance in s. lOF of the Act are "such damages not exceeding 25 per cent of the
amount of arrears as it may think fit to imnose".
Here the two important
features are these : "First the words of importance are "damages not exceeding
25%" show that the determination of damages is not an inflexible application
of a rigid formula.
Second, the words "as it may think fit to impose" in s. 10F
show that the authorities are required to apply their mind to the facts and
circumstances of the case.
[368A-C]
(2) When a body or authority has to determine a matter involving rights
judicially, the principle of natural justice is implied if the decision of that body
or authority affects individual rights or interests.
[368E-F]
Indian Sugars & Manufacturers l,td. v. Amravati Services Co-operative
A
8
c
D
E
F
Society Ltd. & Anr. fl9761 2 S.C.R. 740 and State of Puniab v. K. R. Erry &
G
Sobhag Rai Mehta [1973] 2 S.C.R. 405, applied.

## Text

COAL MINES PROVIDENT FUND COMMISSIONER
DHANBAD & OTHER
v.
J. LALA & SONS
February 13, 1976
[A. N. RAY, C.J., M. H. BEG AND JASWANT SINGH, JJ.J
365
Coal Mines Provident Fund and Bonus Schen1e Act 1948 (XLVI of 1948)-
Seclion IOF and 78-Payn1e11t of dun1ages payable by the ernpioyer-W/lether
the Coal Mines Prorident Fund Con1nlissioner should give a11 hearillf? to the
en1ployer-Mea11i11g of the words '\wtch da1nages" ..... "as it 1nay think -fit to
.inipose".
Section 1 OF of the Coal Mines Provident Fund and Bonus Scheme
Act
1948 is a penal section ·under which for default in the payment of any Provi-
·dent Fund contribution, the Central Government
may
recover
from
such
employer or person as the case may bi!, such damages, not exceeding 25%
of the amount of arrears, as it may think fit to impose. ln respect of the
period from July to September, 1968, the respondent employer was asked to
pay a sum of Rs. 1455.50 as damages being 25o/o of the arrears of Provident
Fund contributions by the appellant to which he filed an objection explaining
the delay.
The employer's request for waiving the damages was negatived.
The writ application of the employer against that order was allowed by the
High Court on two grounds, riz. (i) that the computation of damages should
arise upon consideration of the facts and circumstances, and (ii) the authorities should have given an opportunity to the employer to represent
the
case.
Dismissing the appeal by special leave, the Court,
HELD: (1) The provisions contained in s. 78 of the Act indicate first
that the Coal Mines Provident Fund Commissioner may determine the amount
due from the employer, and seco_nd, for this purpose he may conduct such
enquiry as he may deem necessary.
Therefore, an enquiry is contemplated.
Section 78(3) speaks of reasonable opportunity being given to an employer
to represent his case.
The provision in s. 1 OF of the Act also indicates that
determination of damages is not a mechanical process.
The words of importance in s. lOF of the Act are "such damages not exceeding 25 per cent of the
amount of arrears as it may think fit to imnose".
Here the two important
features are these : "First the words of importance are "damages not exceeding
25%" show that the determination of damages is not an inflexible application
of a rigid formula.
Second, the words "as it may think fit to impose" in s. 10F
show that the authorities are required to apply their mind to the facts and
circumstances of the case.
[368A-C]
(2) When a body or authority has to determine a matter involving rights
judicially, the principle of natural justice is implied if the decision of that body
or authority affects individual rights or interests.
[368E-F]
Indian Sugars & Manufacturers l,td. v. Amravati Services Co-operative
A
8
c
D
E
F
Society Ltd. & Anr. fl9761 2 S.C.R. 740 and State of Puniab v. K. R. Erry &
G
Sobhag Rai Mehta [1973] 2 S.C.R. 405, applied.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1363 of I 974.
Appeal by special leave from the judgment and order dated the 20th
May, 1971 of the Patna High Court at Patna in C.WJ.C. No. 306
of 1969.
L. N. Sinha (Ind Giri.ih Chandra, for the appellants
H
S. N. Mishra, B. P. Singh and A. K. Srivastava, for the respondents.
9-L522SC!/76
366
SUPREME COURT REPORTS
[1976] 3 S.C.R.
A
The Judgment of the Court was delivered by
RAY, C.J.-This appeal by special leave turns on the
question
whether the Coal Mines Provident Fund Commissioner is to hear an
employer before making an order requiring the employer to pay damages under section lOF of the Coal Mines Provident Fund and Bonus
Scheme Act, 1948 (hereinafter referred to as the Act).
B
The employer being the respondent to this appeal was directed by
c
D
E
F
G
H
a letter dated 3 I 4 January, 1969 to pay provident fund contributions
amounting to Rs. 5821.21 for the months of July to September,
1968 and damages at the rate of 25 per cent on the above
dues
amounting to Rs. 1455.50. The employer was required to pay damages under the provisions of section 1 OF of the Act.
The employer filed an objection explaining the circumstances
under which there was delay in the payment of provident fund
contributions.
The employer prayed that damages might not
be
imposed at the rate of 25 per cent for the delay in payment.
The
employer paid the provident fund contributions.
The employer was
informed that damages charged on the delayed payments of provident fund contribution could not be waived.
The employer thereafter filed an application in the High
Court
for an order that the demand notice be quashed.
The High Court
acceded to the application of the employer.
The High Court gave
two reasons.
First, that the computation of amount
of
damages
should arise upon consideration of facts and circumstances and
a
mechanical computation of damages is not contemplated.
Second,
the authorities should have given opportunity to the employer
to
represent the case.
The High Court did not accept the contention of the employer
that section lOF of the Act suffered from the vice of excessive delegation.
The provision contained in section 1 OF of the Act are as follows:-
"Where an employer makes default in the payment of
any contribution or bonus or any charges payable by him
under any scheme framed under this act, or
where
any
person who
is
required
to transfer
provident fund
accumulations
in
accordance
with
the
provisions
of
section 3D makes default in the transfer of such accumulations, the Central Government may
recover
from
such
employer or person, as the case may be, such damages,
not exceeding twenty-five per cent of the amount of arrears,
as it may think fit to impose."
The Central Government under sub-section (1) of section lOC
of the Act is authorised to delegate any power exercisable by it· under the Act, or any Scheme framed thereunder, to the Coal Mines
Provident Fund Commissioner or any other officer.
The Central Government in exercise of the power conferred under section lOC(l) of the Act by notification dated 1st
October,
'
'
).
COAL MINES COMMR. V. J. LALA (Ray, C.J.)
36 7
1966 directed that powers exercisable by it under sections lOA and
A
lOF of the Act and specified in column ( 1) of the Table attached to
the notification shall, subject to the conditions specified in the corresponding entry in column (2) of the Table attached, be exercisable by the Coal Mines Provident Fund Commissioner appointed under section 3C ( 1) of the Act. There is a Schedule attached to the
notification where sliding scale of damages has been fixed by
the
Central Government under section 1 OF of the Act.
The Schedule
B ·
attached to the notification is as follows :-
"Sliding rate of recovery of damages under section lOF
of the Coal Mines Provident Fund and Bonus Scheme Act,
1949."
S.No. of
Period of default
default
during
One
Over
Over
Over
Over
Over
the year.
month
one
two
three
four
five
or less
month
months
months
months
months
up to
up to
up to
up to
two
three
four
five months
months
months
months
2
3
4
5
6
7
!st default
2%of
5% of
18% of
15% of
20%of
25%of
arrears
arrears
arrefili
arrears
arrears
arrears
2nd default
5% "
10% ..
15% ..
20%,,
25%"
25%"
3rd default
10% ,,
15% "
20% ..
25% ,,
25%"
25% "
4th default
15% ..
20%"
25% ..
25% ..
25% ..
25% "
5th default
20% ,,
25%"
25%"
25% "
25%"
25% ,.
6th or
subsequent
25% "
25% ..
25%"
25%"
25% ..
25% "
default
Under section 78 of the Act the Coal Mines Provident Fund
Commissioner or any other officer authorised in that behalf by the
Central Government may, by order, determine the amount due from
any employer under any provision of this Act or any scheme framed
thereunder and for this purpose may conduct such enquiry as he may
deem necessary.
Section 78 (3) also contemplates giving of reasonable opportunity to represent the case.
The High Court held that
the provisions of section 78 are attracted in the case of an order relating to determination of damages for delay in payment of contribution under the Act.
The Solicitor General contended that section 78 of the Act does
not apply for two reasons.
First, section 78 of the Act would be applicable only where liability is to be determined. Neither liability to pay
nor default in payment is disputed in the present case. Second, under
section 1 OF of the Act the amount of damages is quantified and a
c
[)
E
F
G
H
A
c
D
E
F
368
SUPREME COURT REPORTS
(1976] 3 S.C.R.
personal hearing is not necessary because the employer has said everything in his representation and an order for payment of damages. is
not one of punishment.
The provisions contained in section 7 8 of the Act indicate first
that the Coal Mines Provident Fund Commissioner may determine
the amount due from the employer, and, second, for this purpose he
may conduct such enquiry as he may deem necessary.
Therefore,
an enquiry is contemplated .. Section 78(3) speaks of reasonable
opportunity being given to an employer to represent his case. The provisions in section 1 OF of the Act also indicate that detennination of
damages is not a mechanical process.
The. words of importance in
section 1 OF of the Act are "such damages not exceeding 25 per cent of
the amount of arrears as it may think fit to impose".
Herc the two
important features are these.
First, the words of
importance
arc
"damages not exceeding 25 per cent".
These words show that the
determination of damages is not an inflexible application of a rigid
formula.
Second, the words "as it may think fit to impose" in section
1 OF of the Act show that the -authorities are required to apply their
mind to the facts and circumstances of the case.
This Court in The India Sugars and Refineries Ltd. v. Amravathi
Service Co-op. Society Ltd. & Anr. etc.(1) said that "situations in
which a duty will arise to act judicially according to the natural justice cannot be exhaustively enumerated.
A duty to act judicially
will arise in the exercise of a power to deprive a person of legitimate interest or expectation that additional price would be
paid.
The facts which point to an exercise of powers judicially are
the
nature of the interest to be affected, the circumstances in which the
power falls to be exercised and the nature of the sanctions, if any,
involved".
When a body or authority has to determine a matter
involving rights judicially the principle of natural justice is implied
if the decision of that body or authority affects individual rights or
interests.
Again, in such cases having regard to the particular situation it would be unfair for the body or authority not to have allowed
a reasonable opportunity to be heard.
(See State of Punjab v. K. R.
Erry & Sobhag Rai Mehta. ( 2)
The High Court was correct in holding that an opportunity should
have been given to the employer to be heard before the
damages
were determined.
The appeal is, therefore, dismissed with costs.
s. R.
Appeal dismissed.
(!) [1976] 2 S.C.R. 740.
(2) [1973] 2 S.C.R. 405.
I