JUDGMENT : 1. The appellants are a public limited company carrying on business in electrical, mechanical or general engineering products. On March 16, 1984 the Regional provident Fund Commissioner informed the appellants that the establishment was brought within the purview of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 with effect from September 30, 1983. Prior to this date, the company had constituted a separate fund for conferring the benefits on the employees with effect from June 30, 1980. The separate fund created by the appellant company was exempted under the provisions of the Income Tax Act. 2. On April 13, 1984 the appellant company filed an application for exemption of application of provisions of the Act in accordance with Section 17. The section inter alia provides that the appropriate Government may by notification in the Official Gazette exempt whether prospectively or retrospectively any of the provisions of any scheme to any establishment to which the Act applies. The exemption is granted in case where the Government is satisfied that 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. The Regional Provident Fund Commissioner has framed the Employees' Provident Fund Scheme 1952 and Regulation 79 inter alia provides that notwithstanding anything contained in the Scheme, the Commissioner may in relation to any establishment in respect of which an application for exemption u/s 17 of the Act has been received may relax, pending the disposal of the application, the provisions of the Scheme. The company by application dated April 13, 1984 sought exemption u/s 17 as well as relaxation under Regulation 79 of the Scheme. The Government of India by notification published on April 11, 1990 granted exemption to the appellant company in exercise of powers u/s 17 of the Act. As the Commissioner had not granted relaxation under Regulation 79, the Company had transferred funds held under the Scheme set up by the Company, to the Provident Fund Commissioner from end of March 1986. The Government of India by notification published on April 11, 1990 granted exemption to the appellant company in exercise of powers u/s 17 of the Act. As the Commissioner had not granted relaxation under Regulation 79, the Company had transferred funds held under the Scheme set up by the Company, to the Provident Fund Commissioner from end of March 1986. As the funds were transferred at the end of March 1986, the Regional Provident Fund Commissioner served show cause notices dated November 25, 1988 and February 22, 1989 u/s 14-B of the Act on the appellants to explain why damages should not be levied for delayed payment. the delayed payment was for the period commencing from October 1983 and ending on March 25, 1986. FRIDAY, JULY 22, 1994 :- 3. The appellants filed reply on May 5, 1989 and pointed out that the exemption was sought for on April 13, 1984 and so also grant of relaxation under Clause 79 of the Scheme. The appellants pointed out that the relaxation order was not issued and thereupon the appellants deposited the funds. Subsequently, the Government of India issued exemption order u/s 17 and in these circumstances the levy of damages was uncalled for. The Regional Provident Fund Commissioner by order dated January 22, 1990 held that delayed payments are liable for damages upto 100% of the arrears and if the establishment fails to comply with the instructions of the authority, the consequence of payment of damages must follow as matter of course. On the strength of this conclusion, the Commissioner levied damages at the rate of 25% p. a. and the total amount which the appellants were called upon to pay was Rs. 74,674.45. 4. The appellants challenged the order by filing writ petition under Article 226 of Constitution before the learned single Judge sitting on the Original Side of this Court. The learned Judge held that as the exemption was granted with prospective effect and not retrospectively, the Company cannot escape the liability to pay damages. The learned Judge further held that relaxation under regulation 79 of the Scheme was not sanctioned pending the application for exemption u/s 17 and consequently it was incumbent upon the appellants to deposit the contribution from time to time. The order of the learned single Judge is under challenge. The learned Judge further held that relaxation under regulation 79 of the Scheme was not sanctioned pending the application for exemption u/s 17 and consequently it was incumbent upon the appellants to deposit the contribution from time to time. The order of the learned single Judge is under challenge. Shri Ramaswamy, learned counsel appearing on behalf of the appellants, submitted that the facts set out hereinabove unmistakably establish that the conduct of the appellants was free from any blame and on the facts and circumstances of the case, levy of damages was uncalled for. The learned counsel did not dispute that the relaxation was not granted under regulation 79 of the Scheme and the order of exemption was merely prospective in urged that no reasons whatsoever are given for refusal to grant relaxation or not to pass an order with retrospective effect. Shri Ramaswamy submitted and in our judgement, with considerable merit, that once the Government of India came to the conclusion that the scheme floated by the appellant company was more beneficial to the employees than the Scheme under the act then the exercise of powers to levy damages was not just and fair. 5. Shri Master, learned counsel appearing on behalf of the respondents, did not dispute the factual set out hereinabove but urged that the appellants were informed by letter dated May 9, 1984 that pending the final grant of exemption the appellant were required to comply with the provisions of the statutory scheme from the date of the coverage. Shri Master urged that inspite of the communication, the appellants did not deposit the contribution within the period of limitation and the delay on the part of the appellants to deposit contribution must lead to levy of damages. We are not prepared to accede to the submission of the learned counsel because the communication does not set out any reason why the relaxation under Regulation 79 was not granted. Equally, the notification dated April 11, 1990 issued u/s 17 of the Act does not give any why the exemption is not granted with retrospective effect. In these circumstances, in our judgement, in levy of damages was not just exercise of powers. Shri Master submitted that the respondents have a right to levy damages and that contention cannot be disputed but existence of power is one thing and exercise in every case in another. In these circumstances, in our judgement, in levy of damages was not just exercise of powers. Shri Master submitted that the respondents have a right to levy damages and that contention cannot be disputed but existence of power is one thing and exercise in every case in another. On the facts and circumstances of the present case, in our judgment, exercise was uncalled for. Shri Master referred to the decision reported in 1985 LIC 282, Bharat Heavy Electricals Ltd., Bhopal v. The Regional Provident Fund Commissioner, M. P. Indore and contended that Madhya Pradesh High Court on similar facts had held that levy of damages was justified. We are not prepared to accept the contention that once the powers are available, then the same must be exercised in each and every matter. In our judgement, the order levying damages in these circumstances cannot be sustained. 6. Accordingly, appears is allowed and order dated January 22, 1990 passed by the Regional Provident Fund Commissioner, Maharashtra and Goa in exercise of powers u/s 14-B of the Act and the impugned judgement dated August 19, 1993 delivered by learned single Judge in Writ Petition No. 3845 of 1990 are set aside and the proceedings commenced u/s 14-b of the Act are quashed. Shri Ramaswamy stated that the amount demanded in pursuance of the order passed by the Regional Provident Fund Commissioner has already been paid and the respondents should be directed to refund the same. The respondents are directed to refund the same. The respondents are directed to refund the said amount excluding the administrative charges of Rs. 2,278.20 and Rs. 254.35 within a period of six weeks from today.