Whether depositing amount of Provident Fund contribution with Regional Provident Fund Commissioner, after a few years of Court’s direction to do so, makes a Company liable under Section 14B of the Provident Fund Act.

In Regional Provident Fund Commissioner V/s SD College, Hoshiarpur and Others, 1996, by a notification in the Official Gazette, the provisions of the Provident Fund Act were made applicable to the respondent college (which was all along paying its contributions under a Provident Fund scheme framed by the University). Against such notification, the college filed a writ petition before the Hon’ble Supreme Court wherein, the Hon’ble Court held that, the provisions of the Provident Fund Act were in fact applicable to the College and that the College must start paying the arrears payable from the date of the notification to the present day to the RPFC.

Despite of the Court’s directions, the college continued to pay contributions to the Provident Fund framed by the University for about 2 and half years. The RPFC exercising its powers under Section 14B of the Provident Fund Act started proceedings against the College levying damages @ 25% of the amount payable by the College. The College contended that following the judgement of the Hon’ble Apex Court, the College had applied to the University for withdrawal of the amount. It was only after they received necessary directions from the University that they deposited the arrears with the RPFC. The College therefore contended that there was no intentional delay on the part of the College and that the damages should be waived.

The Supreme Court held that the College had a statutory obligation to deposit the amount with the RPFC as it had been directed to do so by the Supreme Court, therefore the college was not justified whatsoever in depositing and continuing to deposit the amount in the University’s account for 2 and half years in spite of the Supreme Court’s direction. Moreover, the Supreme Court held that under the Provident Fund Act, the powers of the Regional Provident Fund Commissioner were only restricted to reducing the percentage of damages. The RPFC had no power to waive the damages entirely. Therefore it was held that there was no justification in waiving the penalty payable by the college.