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Reportable  

IN THE SUPREME COURT OF INDIA

CIVIL APPELALTE JURISDICTION

CIVIL APPEAL NO. 9488 OF 2013 (Arising out of S.L.P. (C) No. 13410 of 2012)

M/s. Arcot Textile Mills Ltd. ... Appellant

Versus

The Regional Provident Fund Commissioner and others      ...Respondents  

J U D G M E N T

Dipak Misra, J.

Leave granted.

2. This  appeal  is  directed  against  the  judgment  and  

order dated 19.12.2011 passed by the High Court of  

Judicature  at  Madras  in  W.A.  No.  2230  of  2011  

whereby the Division Bench has concurred with the  

judgment and order dated 21.4.2011 passed in W.P.  

No. 7046 of 2008 by the learned single Judge holding  

that  the  order  passed  by  the  Assistant  Provident

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Fund Commissioner under the Employees’ Provident  

Funds and Miscellaneous Provisions Act,  1952 (“for  

brevity “the Act”) requiring the appellant to remit a  

sum of Rs.94,27,334/- towards interest under Section  

7Q  of  the  Act  for  belated  remittances,  was  to  be  

assailed in appeal before the Employees’  Provident  

Funds  Appellate  Tribunal  (for  short  “the  tribunal”)  

and, therefore, it was appropriate on the part of the  

appellant to take recourse to the alternative remedy  

and not to approach the High Court under Article 226  

of the Constitution of India.

3. The facts giving rise to the present appeal, bereft of  

unnecessary details, are that the appellant-company  

has  a  textile  factory  at  Kallakurichi  and  it  was  

established  in  the  year  1964  and  with  passage  of  

time it took steps for modernization but it suffered a  

setback in the year 1997 due to slump in the cotton  

industry affecting the industrial base in South India.  

The financial constraints compelled the company to  

make  a  reference  to  the  Board  for  Industrial  and  

Financial  Reconstruction (BIFR) under Section 15(1)  

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of the Sick Industrial Companies (Special Provisions)  

Act,  1985  and  the  BIFR  by  order  dated  4.5.1999  

declared the appellant-company as a sick industrial  

company and appointed Industrial Development Bank  

of India (IDBI) as the Operating Agency.  Because of  

the  prevalent  situation,  the  appellant-company  

defaulted  in  making  contributions  towards  the  

Provident Fund and delay occurred in remitting the  

dues under the Act.  On 3.10.2007, the appellant had  

paid a sum of Rs.83,01,037.80 (Rupees eighty three  

lacs  one  thousand  thirty  seven  and  eighty  paise)  

being arrears of the Provident Fund contribution to  

the  Regional  Provident  Fund Commissioner,  the  1st  

respondent  herein.   A  letter  was  also  sent  by  the  

company  stating  that  the  appellant-company  had  

become  a  sick  industry  and  a  scheme  for  

rehabilitation of the company had been submitted to  

the BIFR and the same was pending consideration.  

On  23.10.2007,  the  Assistant  provident  Fund  

Commissioner, Trichy, the second respondent herein,  

issued a demand requiring the appellant to deposit a  

sum of Rs.94,27,334/- towards interest under Section  

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7Q of the Act for belated remittances.  On receipt of  

the said letter the appellant replied that the report  

stated to have been annexed with the calculation had  

not been sent along with the notice and the same  

may be provided to it to reconcile the accounts.  In  

the meantime,  certain  proceedings went  on before  

the BIFR and,  eventually,  a joint meeting was held  

between the Operating Agency, the company and the  

employees of  the establishment and it  was agreed  

that  the  amount  due  towards  the  Provident  Fund  

shall be paid in a phased manner.  On 3.3.2008, an  

order came to be passed under Section 8F of the Act  

demanding the amount of interest and an order was  

passed  by  the  Assistant  Provident  Fund  

Commissioner  taking  certain  coercive  measures  to  

realize the amount.

4. Being grieved by the aforesaid action the appellant  

approached the High Court in WP No. 7046 of 2008.  

The learned single Judge, by order dated 25.3.2008,  

granted  an  interim  stay  subject  to  the  appellant’s  

depositing 25% of the interest amount within 10 days  

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and  in  pursuance  of  the  said  order  the  appellant  

deposited  Rs.34,00,000/-  before  the  Competent  

Authority under the Act.  When the writ petition came  

up for hearing on 21.4.2011, the learned single Judge  

came to hold that it was appropriate to approach the  

tribunal under Section 7I of the Act and, accordingly,  

dismissed the writ petition.

5. The  said  order  of  the  learned  single  Judge  was  

assailed before the Division Bench which concurred  

with the view expressed by the learned single Judge  

opining that the order impugned charging interest on  

the belated payment of Provident Fund is appealable  

and, accordingly, granted liberty to the appellant to  

move the appellate authority.  The said order is the  

subject-matter of challenge in this appeal by special  

leave.

6. We have  heard  Mr.  Nikhil  Nayyar,  learned  counsel  

appearing for the appellant, Ms. Aparna Bhat, learned  

counsel appearing for respondent Nos. 1 to 3 and Mr.  

C.S. Ashri, learned counsel for respondent No. 6.

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7. At  the outset,  it  obligatory to state that  when this  

matter came up on 20.4.2012, this Court had passed  

the following order: -

“One  of  the  contentions  urged  by  learned  counsel  appearing  for  the  petitioner  is  that  despite specific request, the detailed working of  interest,  amount to  Rs.94,27,334/-  on account  of  delay  in  remission  of  the  statutory  dues  under  the  Employees’  Provident  Fund  and  Miscellaneous  Provisions  Act,  1952  had  not  been provided by the Assistant Provident Fund  Commissioner.   It  is  further  submitted that  in  fact an amount of Rs.34 lakhs has already been  deposited by the petitioner towards the interest  under Section 7Q of the said Act.  In view of the  submission, issue notice.”

8. After so stating, the Court restrained the respondents  

from  taking  any  further  action  in  terms  of  public  

notice dated 21.3.2012 fixing the date for auction of  

the appellant-company’s property.

9. Mr. Nikhil Nayyar, learned counsel appearing for the  

appellant has raised two contentions, namely, (i) the  

learned single Judge as well  as the Division Bench  

erred by expressing the view that an appeal would lie  

to the tribunal under Section 7I of the Act when the  

said provision does not so envisage, and (ii) when the  

appellant  asked  for  the  documents  relating  to  

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computation, it was obligatory on the part of the third  

respondent to provide the same so that the accounts  

could be reconciled and a proper view could be taken  

as regards the computation but the same having not  

been acceded to the action taken is  vitiated being  

violative of the principles of natural justice.

10. Ms.  Aparna  Bhat,  learned  counsel  appearing  for  

respondent Nos. 1 to 3, supporting the order passed  

by the High Court, submitted that when the statute  

commands levy of interest and no discretion is left to  

the  authority,  there  is  no  warrant  for  interference  

with the impugned order.

11. First  we  shall  deal  with  the  maintainability  of  an  

appeal against an order passed under Section 7Q of  

the  Act.   To  address  the  said  controversy  it  is  

necessary  to  appreciate  the  scheme  of  the  Act.  

Section 1(3) stipulates that subject to the provisions  

contained in Section 16 the Act shall apply to every  

establishment  which  is  a  factory  engaged  in  any  

industry specified in Schedule I and in which twenty  

or  more  persons  are  employees  and  to  any  other  

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establishment employing twenty or more persons or  

class  of  such  establishments  which  the  Central  

Government  may,  by  notification  in  the  Official  

Gazette,  specify  in  this  behalf.   Sub-section  (4)  of  

Section  1  provides  that  where  it  appears  to  the  

Central Provident Fund Commissioner, whether on an  

application made in this behalf or otherwise that the  

employer and the majority of employees in relation  

to any establishment have agreed that the provisions  

of  this  Act  should  be  made  applicable  to  the  

establishment, he may, by notification in the Official  

Gazette,  apply  the  provisions  of  this  Act  to  that  

establishment  on  and  from  the  date  of  such  

agreement or from any subsequent date specified in  

that  agreement.   Section  3  confers  power  on  the  

Central  Government  to  issue  notification  directing  

that  the  provisions  of  the  Act  could  apply  to  such  

other establishment which has a common Provident  

Fund  with  other  establishments.   Section  7A(1)  

provides  for  determination  of  moneys  due  from  

employers.   Section 7B deals with review of orders  

passed  under  Section  7A.   Section  7C  deals  with  

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determination  of  escaped  amount.   Section  8  

provides for mode of recovery of moneys due from  

employer.   The  said  provision  stipulates  that  the  

arrears can be recovered in the manner specified in  

section 8B to 8G.  Section 8B provides for issue of  

certificate by the authorised officer in respect of the  

amount due to the recovery officer so as to unable  

him to recover the amount by way of attachment and  

sale  of  movable  and  immovable  property  of  the  

establishment or the employer or take such coercive  

measurers as provided therein.  Section 11 gives a  

statutory  priority  of  payment  of  contributions  over  

other  debts.   Section 11 (2)  contains non-obstante  

clause which prescribes for if any amount is due from  

employer the said amount shall be deemed to be the  

first  charge  on  the  assets  of  the  establishment.  

Section  14B  confers  power  on  the  Competent  

Authority under the Act to recover damages.  Section  

17 provides for power to exempt.

12. This  court  in  Maharashtra  State  Cooperative  

Bank  Limited  v.  Assistant  provident  Fund  

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Commissioner and others1 while interpreting the  

expression “ any amount due from an employer” has  

opined as follows:-  

“The  expression  “any  amount  due  from  an  employer”  appearing  in  sub-section  (2)  of  Section  11  has  to  be  interpreted  keeping  in  view the object of the Act and other provisions  contained therein including sub-section (1) of  Section  11  and  Sections  7-A,  7-Q,  14-b  and  15(2)  which  provide  for  determination  of  the  dues payable by the employer, liability of the  employer to pay interest in case the payment  of  the  amount  due  is  delayed  and  also  pay  damages,  if  there  is  default  in  making  contribution  to  the  Fund.   If  any  amount  payable by the employer becomes due and the  same  is  not  paid  within  the  stipulated  time,  then the employer is required to pay interest in  terms of the mandate of Section 7-Q.  Likewise,  default  on  the  employer’s  part  to  pay  any  contribution to the Fund can visit him with the  consequence of levy of damages.”  

13. We have referred to the aforesaid decision only for  

the purpose of the levy of interest under Section 7Q  

is a part of the sum recoverable under Section 11 (2)  

of the Act, and it is an insegregable part of the total  

amount due from employer.  

14. At  this  juncture,  it  is  relevant  to  state  that  the  

tribunal was constituted at a later stage.  Section 7I  

1 (2009) 10 SCC 123

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provides  for  appeals  to  the  tribunal.   The  said  

provision reads as follows:-

“7I. Appeals  to  Tribunal. –  (1)  Any  person  aggrieved  by  a  notification  issued  by  the  Central Government, or an order passed by the  Central Government or any authority, under the  proviso to sub-section (3), or sub-section (4) of  section  1,  or  section  3,  or  sub-section  (1)  of  section  7A,  or  section  7B  except  an  order  rejecting an application for review referred to in  sub-section (5) thereof, or section 7C, or section  14B, may prefer an appeal to a Tribunal against  such notification or order.

(2) Every appeal under sub-section (1) shall be  filed in such form and manner, within such time  and be accompanied by such fees, as may be  prescribed.”

15. On a perusal of the aforesaid provision it is evident  

that  an  appeal  to  the  tribunal  lies  in  respect  of  

certain  action  of  the  Central  Government  or  order  

passed by the Central Government or any authority  

on certain provisions of the Act.  We have scanned  

the  anatomy  of  the  said  provisions  before.   On  a  

studied  scrutiny,  it  is  quite  vivid  that  though  an  

appeal  lies  against  recovery  of  damages  under  

Section  14B  of  the  Act,  no  appeal  is  provided  for  

against  imposition  of  interest  as  stipulated  under  

Section 7Q.  It is seemly to note here that Section  

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14B  has  been  enacted  to  penalize  the  defaulting  

employers  as  also  to  provide  reparation  for  the  

amount of loss suffered by the employees.  It is not  

only a warning to employers in general not to commit  

a  breach  of  the  statutory  requirements  but  at  the  

same time it  is  meant to  provide compensation or  

redress to the beneficiaries, i.e., to recompense the  

employees for the loss sustained by them.  The entire  

amount  of  damages  awarded  under  Section  14B  

except  for  the  amount  relatable  to  administrative  

charges  is  to  be  transferred  to  the  Employees’  

Provident Fund. (see  Organo Chemical Industries  

and another v. Union of India and others2)

16. Presently we shall  refer  to  7Q of  the Act.   It  is  as  

follows:-

“7Q.  Interest  payable  by  the  employer.-  The  employer  shall  be  liable  to  pay  simple  interest  at  the  rate  of  twelve  per  cent   per  annum  or  at  such  higher  rate  as  may  be  specified  in  the Scheme on any amount  due  from him under this Act from the date on which  the amount has become so due till the date of  its actual payment:

Provided  that  higher  rate  of  interest  specified in the Scheme shall  not exceed the  

2 AIR 1979 SC 1803

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lending  rate  of  interest  charged  by  any  scheduled bank.”

17. Ms. Aparna Bhat, learned counsel for the respondent  

Nos.  1  to  3  would  contend  that  the  payment  of  

interest by the employer in case of belated payment  

is  statutorily  leviable  and  a  specified  rate  having  

been provided, the authority has no discretion and,  

therefore,  it  is  only  a  matter  of  computation  and  

there cannot be any challenge to it.   Be it noted, it  

was canvassed by the said respondents before the  

High Court that an appeal would lie against an order  

passed under 7Q.   On a scrutiny of Section 7I, we  

notice that the language is clear and unambiguous  

and it  does  not  provide  for  an  appeal  against  the  

determination made under 7Q.  It is well settled in  

law that right of appeal is a creature of statute, for  

the right of appeal inheres in no one and, therefore,  

for  maintainability  of  an  appeal  there  must  be  

authority of law.  This being the position a provision  

providing for appeal should neither be construed too  

strictly nor too liberally, for if given either of these  

extreme  interpretations,  it  is  bound  to  adversely  

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affect  the legislative object  as  well  as  hamper  the  

proceedings before the appropriate forum.   Needless  

to say, a right of appeal cannot be assumed to exist  

unless expressly provided for  by the statute and a  

remedy of appeal must be legitimately traceable to  

the  statutory  provisions.   If  the  express  words  

employed in  a  provision  do  not  provide  an  appeal  

from a particular order, the court is bound to follow  

the express words.   To put it otherwise, an appeal  

for its maintainability must have the clear authority  

of law and that explains why the right of appeal is  

described as a creature of statute.  (See: Ganga Bai  

v.  Vijay  Kumar  and  others3,  Gujarat  Agro  

Industries Co. Ltd. v. Muncipal Corporation of   

the  City  of  Ahmedabad  and  Ors.4,  State  of  

Haryana  v.  Maruti  Udyog  Ltd.  and  others5,  

Super Cassettes Industries Limited v. State of  

U.P.  and  another6,  Raj  Kumar  Shivhare  v.   

Assistant Director, Directorate of Enforcement  

and another7, Competition Commission of India  3 (1974) 2 SCC 393 4 (1999) 4 SCC 468 5 (2000) 7 SCC 348 6 (2009) 10 SCC 531 7 (2010) 4 SCC 772

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v.  Steel  Authority  of  India  Limited  and  

another8)

18. At this stage, it is necessary to clarify the position of  

law  which  do  arise  in  certain  situations.   The  

competent authority under the Act while determining  

the moneys due from the employee shall be required  

to conduct an inquiry and pass an order.   An order  

under  Section  7A  is  an  order  that  determines  the  

liability of the employer under the provisions of the  

Act and while determining the liability the competent  

authority  offers  an  opportunity  of  hearing  to  the  

concerned establishment.  At that stage, the delay in  

payment of the dues and component of interest are  

determined.  It is a composite order.  To elaborate, it  

is an order passed under Section 7A and 7Q together.  

Such  an  order  shall  be  amenable  to  appeal  under  

Section 7I. The same is true of any composite order a  

facet of which is amenable to appeal and Section 7I  

of  the  Act.   But,  if  for  some  reason  when  the  

authority  chooses  to  pass  an  independent  order  

under Section 7Q the same is not appealable.   8 (2010) 10 SCC 744

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19. Coming to the case at hand,  it  is  evident that  the  

appellant had sent a communication dated 3.10.2007  

to  the  Regional  Provident  Fund  Commissioner  

submitting that that establishment could not pay the  

provision fund dues from 1998 due to financial crisis,  

etc.  and  it  was  remitting  Rs.83,01,037.80  (Rupees  

eighty  three  lacs  one  thousand  thirty  seven  and  

eighty paise only) from 1998 to April  2006.  Under  

these circumstances, there was no adjudication with  

regard  to  liability  as  the  appellant  company  had  

accepted the fault  on its  own.    As it  appears the  

respondent does not have any cavil  with regard to  

the dues payable towards the provident fund by the  

appellant to the company.  What is disputed is that  

the  third  respondent  issued  a  demand  notice  on  

23.10.2007 requiring the appellant to remit a sum of  

Rs.94,27,334/- towards interest under Section 7Q of  

the  Act  for  the  belated  remittances  made  from  

December  1998  to  April  2006.  The  letter  stated  a  

computation  sheet  was  attached  to  said  demand  

notice  which  was  rebutted  by  the  petitioner  by  

sending a communication stating that it was not sent  

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and it may be provided so that they may reconcile  

the  accounts.   The  demand  notice  manifestly  has  

been issued in exercise of power under Section 7Q of  

the  Act  and  is  an  independent  action  and  against  

such an order or issue of demand no appeal could  

have been filed.    Therefore, the conclusion of the  

learned Single Judge as well as by the Division Bench  

on the said score is not sustainable.  

20. The next issue that arises for consideration is when in  

independent exercise of power under Section 7Q a  

demand comes into existence, whether the principle  

of natural justice would get attracted or not.  Section  

7A (3) provides that no order shall  be made under  

sub-Section  (1)  unless  the  employer  concerned  is  

given  a  reasonable  opportunity  of  representing  his  

case.   Section  14B  which  provides  for  recovery  of  

damages stipulates that before levying and recovery  

of  such  damages,  the  employer  shall  be  given  a  

reasonable  opportunity  of  being  heard.   Learned  

counsel for the respondent Nos. 1 to 3 would submit  

that  the  first  one  is  the  initial  determination  and,  

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therefore, an opportunity of hearing is given and the  

second one which relates to imposition of damages  

there is discretion on the part of the authorities but  

as  far  as  the  levy  of  interest  is  component  is  

concerned, it  being only an arithmetical calculation  

the  question  of  affording  an  opportunity  to  the  

employer  does not  arise.   Learned counsel  for  the  

respondent  has  stressed  upon  the  fact  that  when  

interest payable by the employer is  automatic  and  

the competent authority has no discretion to waive  

the interest or reduce the interest or limit the interest  

otherwise, the question of affording of an opportunity  

of hearing to the employer is not warranted.     

21. To appreciate the said submission we may refer to  

the Constitution Bench decision in  C.B. Gautam v.  

Union of India and others9 .  In the said case, the  

Constitution Bench was dealing with the validity  of  

provision of chapter XX-C inserted in the Income Tax  

Act, 1961 by the Finance Act of 1986. A contention  

was  advanced  by  virtue  of  incorporation  of  the  

provision  the  appropriate  authority  had  been  9  (1993) 1 SCC 78  

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conferred  powers  of  compulsory  purchase  of  

immovable property which was punitive in nature.  It  

was submitted on behalf of the Union of India that  

the  said  Chapter  had been introduced to  curb  the  

large-scale evasion of income-tax and to counter the  

modes of tax evasion adopted by various assesses  

which deprive the Government of its legitimate tax  

deals.   Section  269–UD  provided  for  order  by  

appropriate  authority  for  purchase  of  immovable  

property by Central Government.  The larger Bench  

adverted  to  the  issue  of  natural  justice  as  a  

contention was raised that there was no provision for  

giving an opportunity of being heard before an order  

was passed under the provision of sub-Section 269-

UD occurring in the said chapter.  The Court referred  

to the pronouncements in Union Union of India and  

another v.  Col.  J.  N.  Sinha and another10 and  

Olga Tellis v.  Bombay Municipal  Corporation11  

and opined thus:-

“It  must,  however,  be  borne  in  mind  that  courts have generally read into the provisions  

10 (1970)  2 SCC 458 11  (1985) 3 SCC 545

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of the relevant sections a requirement of giving  a reasonable opportunity of being heard before  an order  is  made which would  have adverse  civil consequences for the parties affected. This  would be particularly so in a case where the  validity  of  the  section  would  be  open  to  a  serious  challenge  for  want  of  such  an  opportunity.

29.  It  is  true  that  the  time  frame  within  which the order for compulsory purchase has  to be made is a fairly tight one but in our view  the urgency is  not such as would preclude a  reasonable  opportunity  of  being  heard  or  to  show cause being given to the parties likely to  be adversely affected by an order of purchase  under Section 269-UD(1). The enquiry pursuant  to  the  explanation  given  by  the  intending  purchaser  or  the intending  seller  might  be  a  somewhat limited one or a summary one but  we decline to accept the submission that the  time-limit provided is so short as to preclude  an enquiry or show cause altogether.”

[Emphasis supplied]

22. After so stating the Constitution Bench proceeded to  

lay  down  that  the  requirement  of  a  reasonable  

opportunity  being  given  to  the  concerned  parties,  

particularly,  the  intending  purchaser  and  the  

intending seller must be read into the provisions of  

Chapter XX-C. In that context, the Constitution Bench  

observed thus:-  

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“The observance of principles of natural justice  is  the  pragmatic  requirement  of  fair  play  in  action. In our view, therefore, the requirement  of  an  opportunity  to  show cause  being  given  before  an  order  for  purchase  by  the  Central  Government  is  made  by  an  appropriate  authority  under Section 269-UD must be read  into  the  provisions  of  Chapter  XX-C.  There  is  nothing in the language of  Section 269-UD or  any other provision in the said Chapter which  would negate such an opportunity being given.  Moreover, if such a requirement were not read  into  the  provisions  of  the  said  Chapter,  they  would  be  seriously  open  to  challenge  on  the  ground of violations of the provisions of Article  14  on  the  ground  of  non-compliance  with  principles of natural justice.”

23. Presently we shall  address to the nature of the lis  

that can arise under this provision.  There cannot be  

any dispute that the Act in question is a beneficial  

social legislation to ensure health and other benefits  

of the employees and the employer under the Act is  

under statutory obligation to make the deposit that is  

due from him. In the event of default committed by  

the employer Section 14-B steps in and calls  upon  

the employer to pay the damages. (See:  Regional  

Provident Fund Commissioner v. S.D. College,  

Hoshiarpur  and  others12).   Section  7Q  which  

provides for interest for belated payment is basically  

12 (1997) 1 SCC 241

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a  compensation  for  payment  of  interest  to  the  

affected employees.  This provision has been made  

to secure just and humane conditions of work as has  

been  opined  in  Regional  Provident  Fund  

Commissioner  v.  Hooghly  Mills  Company  

Limited and others13.  The language employed in  

Section 7Q provides for levy of interest on delayed  

payment and the rates have been stipulated.  When  

a  composite  order  is  passed  or  order  imposing  

interest becomes a part of the order or levy in any of  

the  provisions  of  the  Act  the  authority  grants  a  

reasonable  opportunity  of  hearing  to  the  

employer/affected party.    

24. The  issue  that  falls  for  consideration  in  this  case  

when  the  employer  volunteers  may  be  after  long  

delay  to  pay  the  dues,  can  he  claim any  right  to  

object  pertaining  to  the  interest  component.   On  

certain occasions the authority on its own may issue  

a demand notice under Section 7Q after long lapse of  

time  by  computing  the  delay  committed  by  the  

employer in payment of the dues.  We repeat at the  13 (2012) 2 SCC 489

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cost of repetition that it is a matter of computation  

but sometimes computation is done when the main  

order is passed and at times an interest component  

is demanded separately by the competent authority.  

To say that there cannot be any error at any point of  

time will be an absolute proposition.  There can be  

errors in computation.  It is difficult to hold that when  

a  demand  of  this  nature  is  made  in  a  unilateral  

manner and the affected person is visited with some  

adverse  consequences  no  prejudice  is  caused.  

Learned counsel  for  the respondent would contend  

that the natural justice has been impliedly excluded  

and for the said purpose she would emphasise upon  

the scheme and the purpose of the Act.  There is no  

cavil for the fact that it is social welfare legislation to  

meet  the constitutional  requirement  to  protect  the  

employees.  That is why the legislature has provided  

for  imposition  of  damages,  levy  of  interest  and  

penalty.  It is contended that it is luminous that the  

legislature always intended that when hearing takes  

place  for  determination  of  the  money  due,  the  

component  of  interest  would  be  computed  and  in  

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that  backdrop  the  affected  person  will  have  

opportunity  of  hearing.    But  in  reality  when  an  

independent order is passed under Section 7Q which  

can also be done as has been done in the present  

case the affected person, we are inclined to think,  

should have the right to file an objection if he intends  

to do.  We are disposed to think so, when a demand  

of  this  nature is  made,  it  can not  be said  that  no  

prejudice  is  caused.   It  is  highlighted  by  the  

respondents that once the amount due is determined  

the levy of interest is automatic.  The rate of interest  

is stipulated at 12 per cent or at a higher rate if so is  

provided in the scheme.  Despite this, there can be  

errors with regard to the period and the calculation.  

It  is  a  statutory  power  which  is  exercised  by  the  

competent authority under the Act.   Once the said  

authority  takes  recourse  to  the  measure  for  

computation and sends a  bald  order  definitely  the  

affected  person  can  ask  for  clarification  and when  

computation sheet is provided to him he can file an  

objection.  Though, the area of delineation would be  

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extremely limited yet the said opportunity cannot be  

denied to the affected person.   

25. We may state with profit  that  principles of  natural  

justice  should  neither  be  treated  with  absolute  

rigidity nor should they be imprisoned in a straight-

jacket.   It  has  been  held  in  Ajit  Kumar  Nag  v.  

General  Manager  (PJ),  Indian Oil  Corpn.  Ltd.,   

Haldia and Others14 that the maxim  audi alteram  

partem  cannot  be  invoked  if  the  import  of  such  

maxim  would  have  the  effect  of  paralyzing  the  

administrative  process  or  where  the  need  for  

promptitude or the urgency so demands.  It has been  

stated  therein  that  the  approach  of  the  Court  in  

dealing with such cases should be pragmatic rather  

than  pedantic,  realistic  rather  than  doctrinaire,  

functional  rather  than  formal  and  practical  rather  

than  precedential.   The  concept  of  natural  justice  

sometimes  requires  flexibility  in  the  application  of  

the rule.  What is required to be seen the ultimate  

weighing  on  the  balance  of  fairness.   The  

14 (2005) 7 SCC 764

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requirements  of  natural  justice  depend  upon  the  

circumstances of the case.

26. In Natwar Singh v. Director of Enforcement and  

Another15,  this  Court  while  discussing  about  the  

applicability of the rule had reproduced the following  

passage:-

“It is not possible to lay down rigid rules as to  when  the  principles  of  natural  justice  are  to  apply:  nor  as  to  their  scope  and  extent.  Everything  depends  on  the  subject-matter:”  [see R. v. Gaming Board for Great Britain, ex p   Benaim and Khaida16 at QB p. 430 C], observed  Lord Denning, M.R.

...  Their  application,  resting  as  it  does  upon statutory implication, must always be in  conformity with the scheme of the Act and with  the subject-matter of the case.”  

27. In this context, we may fruitfully refer to the verdict  

in  Kesar Enterprises Limited v. State of Uttar   

Praesh  and  Others17 wherein  the  Court  was  

considering the applicability of principles of natural  

justice  to  Rule  633(7)  of  the  Uttar  Pradesh  Excise  

Manual.   The  said  Rule  provided that  if  certificate  

was not received within the time mentioned in the  

15 (2010) 13 SCC 255 16 (1970) 2 QB 417 17 (2011) 13 SCC 733

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bond  or  pass,  or  if  the  condition  of  bond  was  

infringed, the Collector of the exporting district or the  

Excise  Inspector  who  granted  the  pass  shall  take  

necessary  steps  to  recover  from  executant  or  his  

surety the penalty due under the bond.  A two-Judge  

Bench referred to the decisions in Swadeshi Cotton  

Mills v. Union of India18,  Canara Bank v. V.K.  

Awasthy19 and Sahara India (Firm) v. CIT20 and  

came to hold as follows:-

“30.  ... we are of the opinion that keeping in  view the  nature,  scope and consequences  of  direction under sub-rule (7) of Rule 633 of the  Excise Manual, the principles of natural justice  demand  that  a  show-cause  notice  should  be  issued and an opportunity of hearing should be  afforded  to  the  person  concerned  before  an  order  under  the  said  Rule  is  made,  notwithstanding  the  fact  that  the  said  Rule  does not contain any express provision for the  affected  party  being  given  an  opportunity  of  being heard.”

28. Regard being had to the discussions made and the  

law  stated  in  the  field,  we  are  of  the  considered  

opinion  that  natural  justice  has  many  facets.  

Sometimes, the said doctrine applied in a broad way,  

sometimes in a limited or narrow manner.  Therefore,  

18 (1981) 1 SCC 664 19 (2005) 6 SCC 321 20 (2008) 14 SCC 151

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there has to be a limited enquiry only to the realm of  

computation  which  is  statutorily  provided  regard  

being  had  to  the  range  of  delay.   Beyond  that  

nothing is permissible.  We are disposed to think so,  

for when an independent order is passed making a  

demand, the employer cannot be totally remediless  

and would have no right  even to  file  an objection  

pertaining to computation.  Hence, we hold that an  

objection can be filed challenging the computation in  

a  limited  spectrum which  shall  be  dealt  with  in  a  

summary manner by the Competent Authority.

29. In the present case, it  is manifest from the record  

that the appellant had already deposited a sum of  

Rs.34,00,000/-  before the Competent Authority and  

sought for supply of the calculation sheet the basis  

on which the computation had been made so that it  

could reconcile the accounts.  We think it appropriate  

to  direct  that  the  computation  sheets  shall  be  

provided to the appellant within three weeks and it  

shall  file  its  objection  within  two  weeks  therefrom  

and thereafter  the Competent  Authority  shall  fix  a  

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date  for  reconciliation  of  the  accounts.   However,  

regard being had to the fact that the Act is a piece of  

social welfare legislation, we direct the appellant to  

deposit  a  further  sum  of  Rs.16,00,000/-  within  a  

period of four weeks from today.  If the amount is not  

deposited within the time stipulated hereinabove, the  

entire amount would be leviable and the right to file  

objection shall stand extinguished.

30. Consequently, the appeal is allowed to the aforesaid  

extent and the judgment and order  passed by the  

Division Bench and that of the learned single Judge  

of  the High Court  are set  aside.   In  the facts  and  

circumstances of the case, there shall be no order as  

to costs.

.............................J. [Anil R. Dave]

.............................J. [Dipak Misra]

New Delhi; October 18, 2013.

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