Case Law Details
Paschim Banga Gramin Bank Vs Union of India & Ors. (Calcutta High Court)
In the case of Paschim Banga Gramin Bank Vs Union of India & Ors., the writ petitioner, Paschim Banga Gramin Bank, challenged an order issued by the Regional Provident Fund Commissioner on June 25, 2015, under Section 14B of the Employees Provident Funds and Miscellaneous Provisions Act, 1952. The order imposed a penalty of over Rs. 30 crores due to the bank’s failure to remit contributions to the Provident Fund (PF) and transfer pension fund accumulations during specific periods. The bank argued that Section 14B, which allows for penalties for delayed contributions, is inconsistent with Section 17(1-A) of the Act, which deals with exempted establishments and their obligations. The bank contended that once the Mayurakshi Gramin Bank was merged into Paschim Banga Gramin Bank, the responsibility for handling these funds shifted to a Board of Trustees (BOT), and it no longer had control over delayed payments or fund transfers, thus exempting it from liability for penalties.
The Provident Fund Authority countered the petition, asserting that the bank, even after the merger, retained responsibility for remitting the contributions and transferring accumulations in line with the provisions of the Act. They emphasized that Section 17(1-A) clearly stipulated that the employer must establish a BOT and adhere to the statutory obligations. Furthermore, the authority argued that the imposition of penalties for delays was in compliance with Section 14B, which holds employers liable for defaults in payment. The bank’s claim of arbitrariness was also dismissed as the Provident Fund Authority had provided prior notices and a hearing before imposing the fine. The case ultimately hinges on the interpretation of the provisions of the Act, particularly regarding the responsibilities of employers post-merger and the scope of exemptions under Section 17.
The Court examined the relevant sections of the Act and the Scheme, including the provisions that deal with exempted establishments and the administrative powers of the Provident Fund authorities. In this context, the Court deliberated whether Section 14B penalties were applicable to the bank after the cancellation of the exemption and merger. The decision in this case is crucial in interpreting the responsibilities of merged institutions and their obligations under the Employees Provident Fund and Miscellaneous Provisions Act.
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
In this writ petition as filed under Article 226 of the Constitution of India the writ petitioner while challenging a proceeding and order dated June 25, 2015 under Section 14B of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 ( hereinafter referred to as the ‘said Act’) as passed by Regional Provident Fund Commissioner, Sub-Regional office, Durgapur/respondent no.2 herein has prayed for declaring Section 14 B of the said Act ultravires or inconsistent with Section 17(1-A) (d) (iv) of the said Act vis-a-vis with Article 14 of the Constitution of India with a further prayer to read down Section 14B of the said Act along with other ancillary relief or reliefs by issuing necessary writs.
2. For effective adjudication of the instant writ petition the facts leading to filing of the instant writ petition is required to be discussed in a nutshell.
3. Originally one Mayurakshi Gramin Bank was independently existing as a regional rural bank and at that time it was an exempted establishment within the meaning of Section 17 (1-A) of the said Act and with the implementation of the Employees’ Pension Scheme, 1995 the said Mayurakshi Gramin Bank started depositing contributions in the pension fund with the concerned regional provident fund commissioner.
4. The Ministry of Finance, Government of India by a notification dated February 26, 2007 amalgamated various regional rural banks including Mayurakshi Gramin Bank into Paschim Banga Gramin Bank, the writ petitioner herein.
5. By an order dated 07.09.2007/10.09.2007 the exemption under Section 17 (1-A) of the said Act of Mayurakshi Gramin Bank was cancelled. The Provident Fund Authority duly communicated such revocation order of exemption to the Board of Trustees of the said Mayurakshi Gramin Bank. The Provident Fund Authorities in course of time noticed that the writ petitioner had failed to remit the contributions along with administrative charges within the period from 23.07.1998 to 22.06.2010 and 15.09.2010 to 31.10.2013. The Provident Fund Authorities also noticed that the past accumulations have also not been transferred in relation to Pension Funds, Provident Fund, Employees Deposit Link Insurance Scheme Contributions, etc. Accordingly, on 31.12.2013 and 12.03.2014 two notices have been sent to the writ petitioner by the respondent no.2/Provident Fund authority. Upon hearing the respondent no.2/authority by its order dated June 25, 2015 passed the aforementioned order under Section 14B of the said Act and thereby imposed damages to the tune of Rs.30,26,32,302/- along with interest of Rs.8,06,37,304/- which has been impugned in this writ petition.
6. In course of hearing Mr. Majumder, learned advocate for the writ petitioner at the very outset draws attention of this Court to Section 17 of the said Act. It is submitted by Mr. Majumder that under the law when an establishment is granted an exemption under Section 17(1-A) of the said Act the employer of the said establishment shall have to establish a Board of Trustees for the administration of the Provident Fund as per the Employees’ Provident Fund Scheme, 1952 (hereinafter referred to as the said Scheme) vide Section 17 (1-A)(b) of the said Act and after establishment of the said Board of Trustees (hereinafter referred to as ‘BOT’ in short) the said BOT is duty bound to maintain the detailed accounts of the contributions credited and withdrawals, submit returns to the Provident Fund Authority and invest the Provident Fund money in accordance with the directions issued by the Central Government from time to time and so on as mentioned in Section 17 (1-A) of the said Act.
7. It is further submitted by Mr. Majumder, learned advocate for the writ petitioner that from the spirit of the said Act it would thus reveal that as soon as BOT is created, the establishment lost its control over the Provident Fund as maintained by the BOT and therefore no damages and/or interest can be levied on account of delayed remittance of the contributions and past accumulations upon the establishment which is distinguishable from BOT.
8. It is further submitted by Mr. Majumder, learned advocate for the writ petitioner that on perusal of Section 6 of the said Act read with para nos. 29 and 30 of the said Scheme the employers’ liability comes to an end as soon the exempted establishment deposits contributions with the BOT and in absence of any allegation of delayed deposit of such contribution the respondent no.2 ought not have saddled the writ petitioner with a huge damage and interest which is totally inconsistent of the provision of the said Act and the same is unconstitutional too.
9. Majumder further submits that the alleged period for default in depositing contributions and belated remittance of transfer of past accumulation though occurred subsequent to the process of amalgamation but such delay occurred at the instance of the BOT of Mayurakshi Gramin Bank over which the Paschim Banga Gramin Bank, the writ petitioner herein has got no control and the same has been admitted by the respondent/Provident Fund Authority in its affidavit-in-opposition.
10. Drawing attention to Annexure P2 at page 23 of the writ petition it is submitted that even after amalgamation of the aforesaid banks by the notification dated February 26, 2007 the Provident Fund Authority by its letter dated 07.09.2007/10.09.2007 made correspondence with the BOT of the Mayurakshi Gramin Bank conveying the revocation of the exemption which shows that the respondent no.2 /PF Authority by its act and conduct found the BOT of Mayurakshi Gramin bank is the responsible entity to remit the contributions and past accumulation to the account of the respondent no.2/authority. Mr. Majumder, drawing attention of this Court to para 27-AA of the said Scheme submits further before this Court that Appendix –A of the said para 27 AA of the said Scheme contains revised conditions for grant of exemption under Section 17 of the said Act and therefore none of the said revised conditions are applicable to the writ petitioner which is not an exempted organization under Section 17(1-A) of the said Act. It is thus submitted that the proceeding and order Section 14 B of the said Act as conducted by the respondent no.2 suffers from procedural irregularity. Mr. Mazunmder, learned advocate for the writ petitioner also draws attention of this Court to the Annexure P4 of the writ petition at page no 48 and 40. It is submitted by Mr. Majumder that from the said Annexures it would reveal that on December 27, 2016 the Provident Fund Authority issued guidelines for processing the cases of surrender of Employees’ Provident Fund and therefore the Provident Fund Authority ought not to have imposed damages and penalty under Section 14B of the Act for the period 27.03.1998 to 22.06.2010 and 15.09.2010 to 31.10.2013 which are the periods prior to the issuance of the aforesaid guidelines. In course of argument Mr. Majumder, learned advocate for the writ petitioner relies upon the following reported decisions:
i. Asha Sharma vs. Chandigarh Administration and Ors. reported in (2011)10 SCC 86;
ii. P Power Management Company Ltd., Jabalpur vs. Sky Power Southeast Solar India Pvt. Ltd and Ors. reported in (2023) 2 SCC 703;
iii. Kelvin Jute Company Ltd. vs. Krishna Kumar Agarwal and Ors reported in (2006) 2 CHN 358;
iv. WP No. 6138 (W) of 2009, order dated 14th November, 2011 passed by Calcutta High Court;
v. WP No.6138 (W) of 2009, order dated 5th February, 2018 passed by Calcutta High Court;
vi. WPA 10379 of 2021 by judgment dated 12th December, 2023 passed by Calcutta High Court; and
vii. Arup Bhuyan vs, State of Assam and Anr. reported in (2023) 8 SCC 745.
11. It is submitted by Mr. Majumder that from the materials as placed before this Court it would reveal that the action of the respondent no.2 is not only arbitrary but also the provisions of Section 14B of the said Act is totally inconsistent with Section 17(1-A) (iv) of the said Act as well as with Article 14 of the Constitution of India and thus the same may be declared ultravires and a necessary order may be passed by reading down Section 14B of the said Act prohibiting the respondent no.2/Authority from recovering the damages and interest as levied upon the writ petitioner vide its order dated June 25, 2015.
12. Per contra, Mr. Prasad, learned advocate for the respondent/ Provident Fund Authority also places his reliance upon Section 17(1-A) as well as Section 17(5) of the said Act. It is submitted by Mr. Prasad that Section 17(5) of the said Act read with paragraph 28 of the said Scheme clearly envisages the duty of the establishment whose exemption has been cancelled and/or revoked to transfer the amount of accumulation to the fund of the Provident Fund Authority within the statutory period and the violation of which draws penal action under Section 14B as well as under the other penal provisions of the said Act. It is submitted further on behalf of the Provident Fund Authority that Section 17 of the said Act read with Section 27A of the said Scheme clearly mandates that it is the employer who shall have to establish the BOT and thus by no stretch of imagination it can be said that BOT created and/or established by an employer and /or by an establishment is different and distinct entity. Drawing attention to Clause 22 and Clause 23 of Appendix A of para 27 A of the said Scheme it is submitted by Mr. Prasad, learned advocate for the respondent/Provident Fund that the employer of an erstwhile exempted establishment cannot escape its liability for delayed deposit of contributions and delayed transfer of past accumulation. It is submitted by Mr. Prasad, learned advocate for the Provident Fund that from the order impugned there is least possibility to find out any arbitrariness on the part of the respondent no.2/Authority in view of the fact that prior to passing of the order dated June 25, 2015 two separate advance notices have been sent to the writ petitioner and that due hearing was given to the representative of the writ petitioner. It is further argued by Mr. Prasad that while calculating the damages and interest as recoverable from the writ petitioner no error in arithmetic calculation took place and that from the materials as placed before this Court it cannot be said that Section 14B is at all inconsistent with any of the provisions of said Act and the said Scheme and the same cannot be held to be violative of Article 14 of the Constitution of India.
13. In course of his submission Mr. Prasad, learned advocate for the respondent no.2/ Provident Fund Authority relied upon the following reported decision :-
i. Dalgaon Agro Industries Ltd. ( Now known as Tasati Tea Ltd.) vs. Union of India and Ors reported in (2005) 3 CHN 428 and
ii. Organo Chemical Industries and Anr. vs. Union of India and Ors reported in (1979) 4 SCC 573.
14. Since not only the action of the Provident Fund Authority i.e. the respondent no.2 but also the different provisions of the said Act and the said Scheme have been challenged on the part of the writ petitioner, this Court thinks that some of the relevant provision of the said Act as well as of the said Scheme are required to be looked into for effective adjudication of the instant lis. Some of the relevant Sections of the said Act are enumerated below in verbatim:_
“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 subsection (2) of section 15 [or sub-section (5) of section 17] or in the payment of any charges payable under any other provision of this Act or of 5 [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 7 [from the employer by way of penalty such damages, not exceedingthe amount of arrears, as may be specified in the Scheme:] 8 [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.]”
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 favourable 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 favourable to the employees than the benefits provided under this Act or any Scheme in relation to the employees in any other [establishment] of a similar character; or
(b)………..
(1-A) 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 provisions 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;
(i) submit such returns to the Regional Provident Fund Commissioner or any other officer as the Central Government may direct from time to time;
(ii) invest the provident fund monies in accordance with the directions issued by the Central Government from time to time;
(iii) transfer, where necessary, the provident fund account of any employee; and
(iv) perform such other duties as may be specified in the Scheme.
(1-B)…………
(1-C)………..
(2)…………
(2-A)……..
(2-B)……..
(3)………….
(3-A)………….
(4)………………
(5) Where any exemption granted under sub-section (1), subsection [(I-C)] [, sub-section (2), sub-section (2-A) or sub-section (2-B)] is cancelled, the amount of accumulations to the credit of every employee to whom such exemption applied, in the provident fund [the [pension] fund or the insurance fund] of the establishment in which he is employed [together with any amount forfeited from the employer’s share of contribution to the credit of the employee who leaves the employment before the completion of the full period of service] shall be transferred within such time and in such manner as may be specified in the Scheme or the [Pension] Scheme [or the Insurance Scheme] to the credit of his account in the Fund or the [Pension] Fund [or the Insurance Fund], as the case may be.
………….”
15. In considered view of this Court para 27 AA of the said Scheme is required to be looked into and the same is also reproduced herein below in verbatim:-
27AA. Terms and conditions of exemption.-All exemptions already granted or to be granted hereafter under section 17 of the Act or under paragraph 27A of the scheme shall be subject to the terms and conditions as given in the Appendix A.
Appendix “A”
Revised conditions for grant of exemption under section 17 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
1….
2….
3.
4.
5. The employer shall transfer to the Board of Trustees the contributions payable to the provident fund by himself and employees at the rate prescribed under the Act from time to time by the 15th of each month following the month for which the contributions are payable. The employer shall be liable to pay simple interest in terms of the provisions of Section 7Q of the Act for any delay in payment of any dues towards the Board of Trustees.
6…
7….
8….
9….
10….
11..
12….
13……
14…..
15….
16…
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.
18……..
19…….
20.
21…
22. The employer and the members of the Board of Trustees, at the time of grant of exemption, shall furnish a written undertaking to the RPFC in such format as may be prescribed from time to time, inter alia, agreeing to abide by the conditions which are specified and this shall be legally binding on the employer and Board of Trustees, including their successors and assignees, or such conditions as may be specified latter for continuation of exemption.
23. The employer and the Board of Trustees shall also give an undertaking to transfer the funds promptly within the time limit prescribed by the concerned RPFC in the event of cancellation of exemption. This shall be legally binding on them and will make them liable for prosecution in the event of any delay in the transfer of funds.
24.
25.
26….
27.
28.
29.
30..
28. Transfer of accumulations from existing Provident Funds
(1) Every authority in charge of, or entrusted with the management of, any Provident Fund in existence the accumulations wherein are to be transferred to the Fund under sub-section (2) of section 15 of the Act, [or sub-section (5) of section 17 thereof, as the case may be] shall —
(i) send to the Commissioner a statement showing the amount standing to the credit of each subscriber on the date of the transfer, the total accumulations to the credit of subscribers generally on that date and the advances, if any, taken by the subscribers [within twenty-five days of the application of the Scheme, or cancellation of exemption, as the case may be],
(ii) transfer to the Fund in the manner specified in subparagraph (2) the total accumulations standing to the credit of the subscribers in relation to each factory or other establishment within ten days of the application of the Scheme, or cancellation of the exemption, as the case may be, in case of liquid cash in bank and within thirty days in case of securities, and
(iii) transfer to the Central Board all pass books, books of account and other documents relating to the said accumulations.
(2) All accumulations standing to the credit of the subscribers, howsoever invested, shall be transferred to the Fund by the authority aforesaid in cash:
Provided that where the whole or any part of such accumulations consists of investments in Government securities, or in securities guaranteed by appropriate Government as regards repayment of principal and payment of interest or in both, the authority making the transfer to the Fund shall transfer those securities at the price for which they were actually purchased or transfer a sum equivalent to such price. In case, however, the whole or any part of such accumulations is invested in National Savings Certificates or National Plan Savings Certificates, the appreciated value of such certificates at the time of the transfer will be taken into account in determining the amount of the accumulations to be transferred, provided that the difference between the face value of such certificate and their appreciated value at the time of the transfer has already been credited to the accounts of the subscribers:
Provided further that where the whole or any part of such accumulations consists of investments in securities bearing no guarantee of an appropriate Government as regards repayment of principal and payment of interest], the Central Government may, in exceptional cases, allow acceptance of the transfer of such securities from the authority making the transfer to the Fund at the price for which they were actually purchased.
Explanation: The total amount of provident fund accumulations includes interest thereon and the authority in charge of the Fund shall transfer in cash any balance of interest on investments which happens to be undistributed on the date of the transfer, or realised or realisable for the period prior to the registration of the securities in the name of the Central Board of Trustees, Employees’ Provident Fund.
(3) Any cash transferred under sub-paragraph (2) shall be deposited in any office or branch of the Reserve Bank of India or the State Bank of India to the credit of the [Central Board], and the receipt obtained in respect thereof shall be forwarded to the Commissioner: Provided that where there is no office or branch of either of the two Banks at the place where the [factory or other establishment] is situated the amount shall be credited to the Central Board by means of a Reserve Bank of India Governmental Draft at par.
(4) The accumulations, transferred to the Fund in accordance with this paragraph shall be credited to the account of each of the members of the Fund, to the extent to which he may be entitled thereto having regard to the statement furnished by the authority aforesaid.
(5) When the accumulations in any such Provident Fund as is referred to in subparagraph (1) have been so transferred to the Fund, the Commissioner may, by notification in the Gazette of India, declare that the subscribers of such Provident Fund have now become members of the Fund and that the accumulations aforesaid have now become vested in the Central Board.”
16. Keeping in mind the aforesaid provisions of the said Act and of the said Scheme if this Court makes an endeavour to look into the facts of the instant writ petition it would reveal that admittedly Mayurakshi Gramin Bank was an exempted establishment under Section 17 (1-A) of the said Act and which is why the said Mayurakshi Gramin Bank established a BOT in view of Section 17 (1-A) of the said Act and the said BOT of the Mayurakshi Gramin Bank started its functioning as per provision of Section 17(1-A) (d) of the said Act. With the implementation of the Employees’ Pension Scheme , 1995 with effect from 16.11.1995 the said Mayurakshi Gramin Bank stated deposing the contributions in the pension fund maintained by the BOT of the said Mayurakshi Gramin Bank. On February 26, 2007 by a notification of the Government of India Mayurakshi Gramin Bank was amalgamated with the Paschim Banga Gramin Bank and on and from 10.09.2007 the exemption of the then Mayurakshi Gramin Bank has been revoked and according to the writ petitioner Provident Fund contributions were thereafter deposited prospectively and so far as the transfer of past accumulation lying with the BOT is concerned several exchange of letters took place in between 16.01.2010 and 09.03.2013 regarding modalities of transfer.
17. In course of hearing it has not been contended on behalf of the writ petitioner that there occurred no delay in transferring the Provident Fund Contributions, Employees’ Pension Fund Contributions, Employees’ Deposit Link Insurance Contribution and various administrative charges on the part of the BOT. However, it has been contended that BOT is a separate and distinct entity from the writ petitioner as well as from the Mayurakshi Gramin Bank and the said BOT acts/acted independently which is however being disputed by the respondent/authority.
18. It is settled position of law that by way of amalgamation the writ petitioner/bank was entrusted with all the assets and liabilities of the Mayurakshi Bank which is evident from the Clause 4 of the said notification with reads as under:-
“4. (i) From the effective date of amalgamation, the undertakings of the transferor Regional Rural Banks shall be transferred to and shall vest in the transferee Regional Rural Bank,
(ii) The undertakings of the transferor Regional Rural Banks shall include all assets, rights, powers, authorities and privileges and all property movable and immovable, cash balance, reserve funds, investments and all other rights and interest in or arising out of such property, as are immediately before the commencement of this notification, in the ownership, possession, power or control of the transferor Regional Rural Banks whether within or outside India and all books of accounts, registers, records and all other documents of whatever nature relating thereto and shall also be deemed to include all borrowings, liabilities and obligations of whatever kind then subsisting of the transferor Regional Rural Banks;
(iii) All contracts, deeds, bonds, agreements, guarantees, powers of attorney, grants of legal representation and other instruments of whatsoever nature subsisting or having effect immediately before the commencement of this notification and to which the transferor Regional Rural Banks are a party or which are in favour of the transferor Regional Rural Banks shall be in full force and effect against or in favour of the transferee Regional Rural Bank and may be enforced or acted upon as fully and effectively as if in the place of the transferor Regional Rural Banks, the transferee Regional Rural Bank has been a party thereto or as if they had been issued in favour of the transferee Regional Rural Bank,
iv) If, on the effective date of amalgamation, any suit, appeal or other proceedings of whatsoever nature in relation to any business of the transferor Regional Rural Banks are pending by, or against to, the transferor Regional Rural Banks, the same shall not abate, be discontinued or be, in any way, prejudicially affected by reason of the transfer of the undertaking of the transferor Regional Rural Banks or of anything contained in this notification but the suit, appeal or other proceedings may be continued. prosecuted and enforced by, or against, the transferor Regional Rural Bank;
(v) Any reference to the transferor Regional Rural Banks in any agreement, contract, conveyance, assurance, power of attorney or any other document of whatsoever nature shall be deemed to be a reference to the transferee Regional Rural Bank and the rights and obligations of the transferor Regional Rural Bank shall he deemed to be the rights and obligations of the transferee Regional Rural Bank.”
19. In view of such there is no hesitation to hold that with effect from the date of notification of the amalgamation i.e. February 26, 2007 all the past acts and deeds of Mayurakshi Gramin Bank binds the writ petitioner i.e. Paschim Banga Gramin Bank. On perusal of Sub-clauses 22 and 23 of Appendix A of para 27AA of the said Scheme it reveals to this Court that the present writ petitioner being the employer cannot escape its liability by saying that BOT is an independent authority since in view of the aforesaid two clauses the employer is equally duty bound to perform his obligation on the basis of the written undertaking given to the Provident Fund Authority failing which the employer is liable for prosecution for delayed transfer of funds.
20. Though Mr. Majumder, learned advocate for the writ petitioner in course of his argument vehemently contended that para 27A of the said Scheme was incorporated with effect from October 30, 2003, it appears to this Court that exemption in the name of Mayurakshi Gramin Bank stood revoked on 10.09.2007 and notification of merger was published on 26.02.2007 and therefore the written undertaking as has been executed by and/or ought to have been executed by the Mayurakshi Gramin Bank equally binds the writ petitioner bank since the obligation of the transferee rural bank i.e. Mayurakshi Gramin Bank shall be deemed to be the obligations of the transferrer bank (herein the writ petitioner) by virtue of the notification dated 26.02.2007.
21. On conjoint perusal of the summons dated 31.12.2013 (Annexure P5 to the writ petition), summons dated 12.03.2014 (Annexure P6 to the writ petition) and the order dated 26.05.2015 being Annexure P7 to the writ petition it reveals to this Court that it is the factual finding of the respondent no.2/ authority that there occurred inordinate delay in transferring the aforementioned fund and past accumulation to the Provident Fund Authority by the BOT for which the writ petitioner being the employer cannot escape its liability and thus the writ petitioner /bank became liable for prosecution on account of delay in the transfer of funds as per Clause 23 of Appendix A of Section 27 AA of the said Scheme.
22. As rightly pointed out by Mr. Prasad this Court thus finds no inconsistencies in between provision of Section 14B and Section 17 (1-A) of the said Act and by no stretch of imagination it can be said that Section 14B is also violative of Article 14 of the Constitution. On close scrutiny of the entire proceeding as conducted by the respondent no.2/authority this Court fails to find any arbitrariness on the part of the respondent no.2/authority while passing the order under challenge and on the contrary it appears to this Court that due opportunity was given to the officers of the writ petitioner/bank to defend their case.
23. Since the writ petitioner has also prayed to pass an appropriate order to read down Section 14B of the said Act, the law of the land relating to ‘read down’ is required to be looked into. In the reported decision of Arup Bhuyan (supra) as cited form the side of the writ petitioner the Hon’ble Supreme Court in its larger Bench expressed the following :-
“59. Now so far as the reading down of Section 10(a) (i) of the UAPA, 1967 by this Court in Arup Bhuyan is concerned, at the outset it is required to be noted that such reading down of the provision of a statute could not have been made without hearing the Union of India and/or without giving any opportunity to the Union of India.
60. When any provision of parliamentary legislation is read down in the absence of the Union of India it is likely to cause enormous harm to the interest of the State. If the opportunity would have been given to the Union of India to put forward its case on the provisions of Section 10(a)(i) of the UAPA, 1967, the Union of India would have made submissions in favour of Section 10(a) (i) of the UAPA including the object and purpose for enactment of such a provision and even the object and purpose of the UAPA. The submission made by Shri Parikh, learned Senior Counsel relying upon the decision of this Court in Sanjeev Coke22 that it is ultimately for the Court to interpret and read down the provision to save any provision from declaring as unconstitutional is concerned, it is true that it is ultimately for the Court to interpret the law and/or particular statute. However, the question is not the power of the Courts.
The question is whether can it be done without hearing the Union of India?
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61. Even otherwise in absence of any challenge to the constitutional validity of Section 10(a)(i) of the UAPA there was no question of reading down of the said provision by this Court. Therefore, in the absence of any challenge to the constitutional validity of Section 10(a) (i) of the UAPA, 1967 there was no occasion for this Court to read down the said provision.
62. Even otherwise as observed and held by this Court in Subramanian Swamy v. Raju23 reading down the provision of a statute cannot be resorted to when the meaning of a provision is plain and unambiguous and the legislative intent is clear. This Court has thereafter laid down the fundamental principle of “reading down doctrine” as under: (SCC p. 420, para 61)
“61. Courts must read the legislation literally in the first instance. If on such reading and understanding the vice of unconstitutionality is attracted, the courts must explore whether legislative omission. If such an intendment can be reasonably implied without undertaking what, unmistakably, would be a legislative exercise, the Act may be read down to save it from unconstitutionality.”
At the cost of repetition, it is observed that reading down a particular statute even to save it from unconstitutionality is not permissible unless and until the constitutional validity of such provision is under challenge and the opportunity is given to the Union of India to defend a particular parliamentary statute.
63. In view of the above in all the aforesaid three decisions, this Court ought not to have read down Section 10(a)(i) of the UAPA, 1967 more particularly when neither the constitutional validity of Section 10 (a)(i) of the UAPA, 1967 was under challenge nor the Union of India was heard.”
24. Admittedly in the instant writ petition the writ petitioner has raised the issue of unconstitutionality of Section 14B of the said Act and therefore there cannot be any predicament on the part of the writ petitioner to pray for reading down Section 14B of the said Act. However as discussed (supra) on comparative study of different provisions of the said Act vis-à-vis the said Scheme it never appears to this Court that Section 14B of the said Act is in anyway inconsistent with Section 17(1-A) of the said Act as well as with the different provisions of the said Scheme and thus this Court finds least possibility for reading down the aforesaid Section as prayed for by the writ petitioner.
25. In view of the discussion made hereinabove this Court finds no illegality and/or irregularity and/or irrationality and/or arbitrariness on the part of the respondent no.2 in passing the order dated 25.06.2015 thereby imposing damages under Section 14B and interest under Section 7(q) of the said Act upon the writ petitioner.
26. The instant writ petition is thus devoid of merit and is thus hereby dismissed.
27. There shall be however no order as to costs.
28. Urgent Photostat certified copy of this judgement, if applied for, be given to the parties on completion of usual formalities.
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