FEDERAL BANK,ALWAYE V. REGIONAL PROVIDENT FUND COMMISSIONER

OP/8586/1993

AI Insights

The case revolves around a dispute between Federal Bank Ltd. and the Employees Provident Fund Organisation regarding the transfer of various funds and the applicable interest rates post the de-coverage of the Bank under the Employees Provident Fund and Miscellaneous Provisions Act, 1952. The Bank contested the first respondent's failure to transfer the full amounts due and the application of simple interest instead of compound interest on the funds. The court examined the correspondence between the parties, the applicable laws, and the reports from appointed Chartered Accountants to arrive at its decision.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 732890 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 22-08-2011
• Assessment Year: misc
• Other Referred Cases: Sandvik Asia Ltd. v. Commissioner of Income Tax I, Pune and others, Life Insurance Corporation of India v. Sindhu, State of Haryana and others v. M/s. S.L. Arora and Company, Dhananjay Malik and others v. State of Uttaranchal and others
• Laws Referred To: Employees Provident Fund and Miscellaneous Provisions Act, 1952
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: N N SUGUNAPALAN
• Assessee Lawyers: M MATHAI
• Keywords: Administrative charges; Compound Interest; Family Pension Fund; Provident fund; Simple Interest; Employees Deposit Linked Insurance Scheme
• Section: 19A

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR MONDAY, THE 22ND AUGUST 2011 / 31ST SRAVANA 1933 OP.No. 8586 of 1993(V) ---------------------- PETITIONER(S): --------------- FEDERAL BANK LTD., P.B. NO.103, ALUVA - 683 101, REPRESENTED BY ITS DEPUTY GENERAL MANAGER (PERSONNEL) SHRI P.K. SIVADASA MENON. BY ADV. SRI.M.PATHROSE MATTHAI, SENIOR ADVOCATE RESPONDENT(S): --------------- 1. THE REGIONAL PROVIDENT FUND COMMISSIIONER, EMPLOYEES PROVIDENT FUND ORGANISATION, SUB REGIONAL OFFICE, P.B. NO.1895, COCHIN - 17. ADDL. R2: K. CHANDRA BABU, S/O. N.K. KUNJU PILLAI, AGED 35, RESIDING AT RAGAM, ALUVA. ADDL.R3: JOHN CHERIYAN DEPUTY GENERAL MANAGER, (ACCOUNTS) FEDERAL BANK LTD., THOTTAKKATTUKARA, AVALUA - 3, ADDL.R4: THE FEDERAL BANK OFFICERS' ASSOCIATION, REPRESENTED BY ITS GENERAL SECRETARY, ALWAYE - 683 101. ADDL.R5; FEDERAL BANK RETIRED OFFICERS, FORUM (FBROF) FBOA CENTRE, FBOA BUILDING, ALUVA - 683 101, REP. BY ITS PRESIDENT, MR. K.V. KURIAKOSE, AGED 71, S/O. POTHEN VARKEY. (ADDL.R2 AND R3 IMPLEADED AS PER ORDER I N CMP NO.18936/1993 DT.27.10.1993 (ADDL.R4 IMPLEADED AS PER ORDER IN CMP NO.24035/1995 DT.18.8.1995 (ADDL. R5 IMPLEADED AS PER ORDER IN 3347/2010 DT.15.6.2010) ADV. SRI.N.N.SUGUNAPALAN, SENIOR ADVOCATE SRI.MATHEW ZACHARIAH FOR SRI.P.F.THOMAS, SENIOR ADVOCATE SMT.SREELEKHA PUTHALATH FOR SRI.E.M.MURUGAN FOR ADDL.R2 SRI.E.M.MURUGAN FOR ADDL.R5 SRI.T.A.JOY FOR ADDL.R5 SMT.SUMATHY DANDAPANI, SENIOR ADVOCATE FOR R5 THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 19/7/2011, THE COURT ON 22/08/2011, DELIVERED THE FOLLOWING: APPENDIX EXT.P1-TRUE COPY OF LETTER DT.2.3.1985 EXT.P2-TRUE COPY OF LETTER DT.20.4.1985 EXT.P3-TRUE COPY OF ORDER DATED 7.9.1992 EXT.P4-TRUE COPY OF LETTER DT.8.1.1993 EXT.P5-TRUE COPY OF LETTER DT.26.3.1993 EXT.P6-TRUE COPY OF LETTER DT.29.3.1993 EXT.P7-TRUE COPY OF LETTER DT.16.4.1993 EXT.P8-TRUE COPY OF LETTER DATED 21.4.1993 EXT.P9-TRUE COPY OF LETTER DATED 11.5.1993 EXT.P10-TRUE COPY OF LETTER DT.25.5.1993 EXT.P11-TRUE COPY OF LETTETR DT. 8.6.1993 EXT.P12-TRUE COPY OF LETTER DATED 11.6.1993 EXT.P13-TRUE COPY OF LETTER DT.11.6.1993 EXT.P14-TRUE COPY OF LETTER DT.17.6.1993 EXT.P15-TRUE COPY OF STATEMENT SHOWING THE PARTICULARS OF THE EMPLOYEES OF THE PETITIONERs EXT.P16-TRUE COPY OF LIT OF EMPLOYEES EXT.P17-TRUE COPY OF APPLICATIOIN FOR WITHDRAWAL OF SECOND INSTALMENT TO R2 FROM 19.4.1993 EXT.P18-TRUE COPY OF PROSECUTION NOTICE DATED 16.2.1985 EXT.P19-TRUE COPY OF DO. DATED 16.2.1985 EXT.P20-TRUE COPY OF LETTER DATED 27.7.1993 SENT BY THE FIRST RESPONDENT TO THE PETITIONER. EXT.P21-TRUE COPY OF STATEMENT OF PARTICULARS OF EMPLOYEES EXT.P22-TRUE COPY OF STATEMENT REGARDING THE EMPLOYEES AND THE WITHDRAWALS. EXT.P23-TRUE COPY OF LETTER DATED 19.10.1993 SENT BY THE PETITIONERs EXT.P24-TRUE COPY OF STATEMENT OF ACCOUNTS EXT.P25-TRUE COPY OF MINUTES OF PROCEEDINGS AND DISCUSSIONS HELD ON 2.11.2006 BY THE PETITIONER BANK AND ASST. PROVIDENT FUND COMMISSIONER EXT.P26-TRUE COPY OF DO. HELD ON 20.11.2006 EXT.P27-TRUE COPY OF VALUATION REPORT EXT.P28-TRUE COPY OF CHART SHOWING THE RATE OF INTEREST APPLICABLE TO FEDERAL BANK EMPLOYEES PROVIDENT FUND TRUST. EXT.P29-TRUE COPY OF QUOTATION OF THE SECURITIES TAKEN FROM THE WEBSITE EXT.P30-TRUE COPY OF JUDGMENT IN WP NO.30578/2000 OF KARNATAKA HIGH COURT EXT.P31-TRUE COPY OF STATEMENT OF FIMMDA, PDAI & BLOOMBERG GOIng EXT.P33-TRUE COPY OF STATEMENT OF AMOUNT RECEIVABLE. (NO DOCUMENT MARKED AS EXT.P32 SEEN IN THE FILE) RESPONDENTS' EXTS: EXT.R1-TRUE COPY OF W.P.NO.505/1983 OF HIGH COURT OF JUDICATOR, BOMBAY. EXT.R1(A)-TRUE COPY OF THE STATEMENT ISSUED TO THE SUBSCRIBER FORM NO.23 YEAR 1991-1992 ANNEXURE A AND B PRODUCED ALONG WITH CMP 33487/1995 ANNEXURE A- TRUE COPY OF LETTER DATED 16.10.1995 ANNEXURE B-TRUE COPY OF LETTER DATED 9.11.1995 ANNEXURE A TO C PRODUCED ALONG WITH CMP 397/1996 ANNEXURE A-TRUE COPY OF LETTER DATED 9.11.1995 ANNEXURE B-TRUE COPY OF LETTER DATED 6.12.1995 ANNEXURE C-TRUE COPY OF COMMUNICATION SENT BY R1 ON 2.1.1996 ANNEXURE A TO C PRODUCED ALONG WITH THE STATEMENT DT. 23.10.1997 ANNEXURE A- TRUE COPY OF CALCULATION SHEET ANNEXURE B-TRUE COPY OF LETTER DATED 16.10.1995 ANNEXURE C-TRUE COPY OF LETTER DATED 9.11.1995 ANNEXURE A TO C PRODUCED ALONG WITH THE STATEMENT DATED 17.1.2008 ANNEXURE A- DETAILS OF THE INTEREST CALCULATED AND PAID ANNEXURE B-TRUE COPY OF DETAILS OF THE PAYMENTS GIVEN BY R2 ANNEXURE C- DO. DO. ANNEXURE I PRODUCED ALONG WITH IA 17009/2006 - STATEMENT OF THE ASSISTANT PROVIDENT FUND COMMISSIONER (LEGAL) KOCHI. ANNEXURE I AND II PRODUCED ALONG WITH IA 3347/2010 ANNEXURE I - TRUE PHOTO COPY OF JUDGMENT DATED 3.4.2009 IN OP 981/96 OF THIS COURT. ANNEXURE II-PHOTO COPY OF THE COMMUNICATION DT.6.1.2010 OF R2 EXT.R1(A)-PRODUCED IN IA 1765/2011 - TRUE COPY OF REPORT SUBMITTED BY THE CHARTERED ACCOUNTANT ANNEXURE R1(A) PRODUCED IN IA 6711/2011 - TRUE COPY OF CALCULATION STATEMENT OF P.F. DUES IN RESPECT OF FEDERAL BANK ANNEXURE III PRODUCED ALONG WITH THE AFFIDAVIT FILED BY THE RESPONDENT ON 11.4.2011 - TRUE COPY OF CALCULATION SHEET FOR ARRIVING AT THE AMOUNT DUE FOR TRANSFER ANNEXURE R1 PRODUCED IN IA 7800/2011 - COPY OF LETTER DATED 23.5.2011 RECEIVED FROM CHARTERED ACCOUNTANT EXT.R5(A)-TRUE COPY OF JUDGMENT DATED 3.4.2009 IN OP 891/1996 OF THIS COURT EXT.R5(B)-TRUE COPY OF COMMUNICATION DATED 6.1.2010 OF R1 // TRUE COPY // P.S. TO JUDGE T.R. Ramachandran Nair, J. - - - - - - - - - - - - - - - - - - - - - - - - O.P. No. 8586 of 1993-V - - - - -- - - - - - - - - - - - - - - - - - - - - Dated this the 22nd day of August, 2011. JUDGMENT This writ petition is filed by the petitioner Bank seeking to quash Ext.P13 communication and for appropriate directions to the first respondent. The entire dispute relates to the transfer of accumulations of Employees Provident Fund Scheme, Family Pension Fund, Administrative charges, Employees Deposit Linked Insurance Scheme and EDLI administrative charges of the employees of the petitioner Bank as well as interest payable to them. 2. The background of the dispute as averred in the writ petition is the following. The petitioner is a Banking company governed by the Banking Regulation Act which is engaged in the business of banking. It has got branches spread over the entire State of Kerala as well as other different States all over India with more than 5000 employees on its rolls. Earlier, the branches of the petitioner Bank were confined within the State of Kerala. It was covered by the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (for short 'the Act'). The Bank was remitting the contribution to the concerned Provident Fund Authorities. After the Bank started to open branches outside the State of Kerala, the provisions of the Act became inapplicable. But in spite of the same, the first OP 8586/1993 2 respondent was enforcing the provisions of the Act and contributions were being collected. This resulted in the Bank raising objections in the matter. As per Ext.P1 dated 2.3.1985 detailed objections were raised by the Bank in the matter. By Ext.P2 communication, the Bank was informed by the respondent that the matter has been referred to the Government of India for their opinion. Therefore, the petitioner Bank was compelled to remit the contributions even thereafter. Finally, the dispute was resolved by the Central Government under Section 19A of the Act, by Ext.P3 order dated 7.9.1992. After hearing both sides, the Government of India held that the Act ceased to apply to the petitioner Bank on the date when the objection was made by the petitioner before the Regional Provident Fund Commissioner, Kerala. 3. Even though so many further correspondences ensued, and in spite of the request made by the Bank, the transfer of accumulations of the provident fund and family pension fund, etc. was not effected. Those communications have been produced as Exts.P4 to P14. In Ext.P13 communication, the Bank was informed that the transfer of accumulations will be on the basis of credit as on 30.9.1992 since it was in September, 1992 the Government of India has given the order of de-coverage. They were further informed that the contributions received under the Family OP 8586/1993 3 Pension Fund and Employees Deposit Link Insurance upto September, 1992 will not be refunded to the establishment. 4. Various contentions have been raised in the writ petition. 5. The first respondent has filed counter affidavit and statements and the petitioner has filed reply affidavits at various stages. This Court passed an interim order in C.M.P.No.15304/1993 directing the first respondent to transfer 85% of the Provident Fund accumulations to the Federal Bank Employees Provident Fund Trust within a period of three weeks from the date of receipt of a copy of the order. By another order dated 25.9.1995 in C.M.P.No.26115/1995 this Court, after recording the submission of the learned counsel for the first respondent that the entire amount collected by the Regional Provident Fund Commissioner, Ernakulam from the petitioner Bank by way of provident fund contribution and family pension fund would be returned with accumulation of interest, if any, directed the respondent to refund the same within a period of two months from the said date. 6. The first respondent transferred an amount of Rs.17,63,00,000/- on 6.9.1993 stating that the same is 85% of the Provident Fund accumulations at the close of 30.9.1992, which was encashed by the Bank on 10.9.1993. After the second interim order was passed, the first respondent issued two cheques for Rs.1,72,12,776/- and Rs.27,20,000/- OP 8586/1993 4 dated 25.10.1995, being part of the remittance of contribution of provident fund, family pension fund, etc. for the period from October, 1992 to May 1993. This was encashed on 27.10.1995. On 16.1.1996 the first respondent sent securities with face value of Rs.2,66,00,700/-. 7. Even though various statements were filed, the parties could not agree on the amounts to be transferred and the disputes persisted on various grounds. This Court thus passed an interim order dated 25.10.2006, after hearing the parties and after noticing the pending disputes. It was ordered as follows: “In order to find a possible solution to the dispute arising for decision in this case, it is necessary that the Bank may depute two officers to meet Sri Ranjay Mooshahary, Assistant Provident Fund Commissioner (Legal), Employees Provident Fund Organisation, Sub Regional Office, Kochi within two weeks. The Bank shall produce their statement of accounts. The Assistant Commissioner, Provident Fund, shall also make available the statement of accounts to be perused by the Bank Officials so as to enable both sides to have access to the records maintained by each other and if possible, to file a joint statement or separate statement, as the case may be, within a period of two weeks thereafter.” 8. Thereafter, along with the affidavit dated 27.11.2006 the Bank produced the minutes of the discussions held in the meetings on 2.11.2006 OP 8586/1993 5 and 20.11.2006, as Exts.P25 and P26, apart from Ext.P24 statement of accounts showing the balance amount due from the Employees Provident Fund Organisation as on 30.9.1992. The E.P.F. Organisation also filed a statement on 30.11.2006 and produced Annexure I statement of the Assistant Provident Fund Commissioner (Legal). After considering various aspects, this Court passed an interim order on 10.7.2007. With regard to the undisputed portions of amounts, it was agreed during hearing that the first respondent can be directed to transfer the said amounts within a stipulated time. Rs.27,34,294/- had to be transferred to the Federal Bank Employees Provident Fund Trust and an amount of Rs.18,13,526/- was to be paid to the Federal Bank being administrative charges and Bank's contribution under the EDLI Scheme for the period from October, 1992 to May, 1993. This Court directed the first respondent to transfer the above amounts to the Federal bank Employees Provident Fund Trust immediately, at any rate, before the expiry of one month from the date of the order. But there were further disputes in the matter and ultimately this Court on agreement of parties, passed an interim order on 23.11.2010. This Court was of the view that the various disputes between the petitioner and the first respondent require an examination of the accounts including the amounts transferred and the various contributions thereof. Both parties agreed that OP 8586/1993 6 the task could be entrusted to a Chartered Accountant, as the matter requires deeper examination of accounts in respect of thousands of employees and the same cannot be done evidently by this Court and they agreed that M/s. Arun & Ramadas, Chartered Accountants, Sree Govind, Manakkeparambil Lane, Azad Road, Kaloor can be appointed to go into the entire accounts and file a report before this Court to enable this Court to finally pronounce on the contentions raised between the parties. This Court directed the petitioner to transfer all the records available to them and both parties were directed to furnish the respective claims before the Chartered Accountants in writing for enabling them to arrive at the correct figures. 9. The Chartered Accountants filed a report on 9.3.2011 after verifying the accounts. Thereafter, the first respondent filed a fresh calculation statement with a verified petition dated 6.4.2011. The same was produced along with an affidavit on 11.4.2011. This Court on 12.4.2011 by an interim order, directed the same to be produced before the Chartered Accountants for their additional report. Accordingly a second report has also been filed by the Chartered Accountants on 24.6.2011. Thereafter the case was posted for final hearing. 10. Heard learned Senior Counsel for the petitioner Shri M. Pathrose Mathai, learned Senior Counsel Shri N.N. Sugunapalan, appearing for the OP 8586/1993 7 first respondent and learned Senior Counsel Smt. Sumathi Dandapani, appearing for additional fifth respondent who is the President of Federal Bank Retired Officers Forum who supported the arguments raised by the learned Senior Counsel appearing for the Bank. 11. The main dispute is with regard to the liability of the first respondent to pay compound interest as per Para 60 of the Employees Provident Fund Scheme, 1952 (for short 'the Scheme') and the liability to transfer Family Pension Fund, Employees Deposit Link Insurance, Administrative Charges, etc. 12. Learned Senior Counsel for the petitioner submitted that the first respondent was bound to transfer all the amounts in terms of the interim orders passed by this Court and in terms of the provisions of the Act and the Scheme. It is pointed out that both parties were directed to file separate statements as per the interim order dated 25.10.2006 and in Annexure I produced along with the statement dated 30.11.2006 of the first respondent, objections were raised for the first time regarding the transfer of family pension fund, even though it is against the undertaking given before this Court and which was recorded in the interim order dated 25.9.1995. It is submitted that at the time when the discussions were made as directed by this Court pursuant to the said interim order, on some of the points OP 8586/1993 8 agreement could be reached and thus they remained undisputed. It is pointed out that even though in Annexure I statement filed by them, it was mentioned that going by the notification GSR 79 dated 25.2.2000 of the Government of India, the provisions of the Act is applicable to the Federal Bank, the same was under challenge before this Court by the petitioner Bank and certain other Banks in O.P.No.25270/2000 wherein an interim order of stay was granted and subsequently the writ petition itself was allowed. It is submitted that the delay in transferring of the accumulations as well as other amounts will attract payment of compensation by way of interest. The amount belong to the individual employees who had contributed along with the contributions made by the Bank. The Bank has formed the Trust and the accumulations transferred, had to be utilised for settling the claims. My attention was invited to the various provisions of the Act by the learned Senior Counsel for the petitioner and it was submitted that the final claim arrived at by the Chartered Accountants in the report dated 9.3.2011, as transferable by the first respondent, is liable to be transferred by the first respondent Organisation with interest till actual date of payment. In this context, learned Senior Counsel relied upon the principles stated by the Apex Court in Sandvik Asia Ltd. v. Commissioner of Income Tax I, Pune and others [(2006) 2 SCC 508] regarding the OP 8586/1993 9 liability to pay compensation for the delayed payment of the principal amount as well as interest. 13. Learned Senior Counsel for the first respondent, Shri N.N. Sugunapalan submitted that the Bank raised the objection with regard to the de-coverage of Act, by Ext.P1 dated 2.3.1985. Ext.P3 order was passed in the year 1992. The de-coverage ordered by the Government of India thus excluded the Bank and its employees from the operation of the Act. Therefore, the provisions of the Act ceased to be in operation from the date on which the Bank objected, viz. 2.3.1985. Therefore, from the said date in 1985 onwards, Para 60 of the Scheme does not apply. It is pointed out that in the light of the exclusion, the same deprives any benefit under the Act and the Scheme. It is therefore submitted that under the Manual of Accounting Procedure only simple interest is calculable. Hence, on the basis of the same, it can be seen that excess amount has been transferred already. It is thus submitted that para 60 of the Scheme only applies to a covered employee. Learned Senior Counsel submitted that the principles stated in Sandvik Asia Ltd.'s case {(2006) 2 SCC 508) will not apply to the facts of this case. Reliance was also placed on the decision of this Court in Life Insurance Corporation of India v. Sindhu (2006 (2) KLT 785 - SC), State of Haryana and others v. M/s. S.L. Arora and Company (AIR OP 8586/1993 10 2000 SC 1511) and Dhananjay Malik and others v. State of Uttaranchal and others [(2008) 4 SCC 171 in support of the plea. 14. Learned Senior Counsel appearing for the additional 5th respondent Smt. Sumathi Dandapani supported the arguments raised by the learned Senior Counsel for the petitioner. It is submitted that the first respondent has delayed the payment due to the real beneficiaries of the Scheme even after the Trust was created by the Bank pursuant to the order passed by the Govt. of India as per Ext.P3. Purposeful delay has been caused in implementation of the orders of the Government and transfer of the Fund to the Trust. Many of the employees retired and they could not get the entire benefits also. It is pointed out that reliance placed on the Manual of Accounting Procedure cannot be accepted in the light of the provisions of the Act and the Scheme. 15. First I will refer to the respective stand taken by the parties in the various correspondences produced in the writ petition. Ext.P1 is dated 2.3.1985 wherein the Bank has raised serious objections about the notice claiming damages under Section 14B of the Act and the enhanced rate of contribution. It was pointed out that the Act has ceased to apply to the Bank already as it is having branches in several States in India and the Central Government has not made applicable the provisions of the Act to the OP 8586/1993 11 Banking Companies which are having branches in more than one State. Accordingly, it was informed that the claim is unjust and unenforceable. By Ext.P2, the first respondent informed the Bank that the matter has been referred to the Govt. of India for their considered opinion and on getting details, a reply will be furnished. 16. Ext.P3 is the order passed by the Central Government in a petition filed by the Bank under Section 19A of the Act praying for a declaration that the provisions of the Act are not applicable to the petitioner Bank ever since 19.1.1973 when it opened branches in more than one State. The same is a detailed order which considers the respective stand taken by both parties. Finally, it was declared that the Act ceased to apply to the petitioner Bank on the date when the objection was made by the petitioner before the Regional Provident Fund Commissioner, Kerala. 17. By Ext.P4, the Bank informed the first respondent about the formation of the Trust and obtaining of approval under the Income Tax Act and requested for various actions at the end of the first respondent including transfer of provident fund contributions by employees and Bank and the accumulations thereon, the total amounts contributed by the employees and Bank towards Family Pension Scheme and accumulations thereon and the total contributions made and accumulations thereon in OP 8586/1993 12 connection with Deposit Linked Insurance Scheme minus payments effected. By Ext.P5 communication dated 26.3.1993 the Bank was informed that steps are being taken in the matter and pending a final decision on modalities of transfer the bank was requested not to forward any more applications from the employees from 1.4.1993. In the reply as per Ext.P6, the Bank maintained that so long as the first respondent retains the provident fund account of the employees and other connected accounts, they cannot stop dealing with applications of employees and further informing that the Bank will do so till the transfer of PF accumulations to the Trust. In Ext.P7, the first respondent informed the Bank about the proposal to immediately transfer 50% of the accumulations on an adhoc basis and further directing the Bank not to send any loan/settlement applications. In the reply Ext.P8, the Bank highlighted the fact that no effective steps have been taken in the matter to transfer the amounts and to provide the details required for administering the fund and that unless and until the full amount and the particulars of remittance, withdrawal, etc. are furnished, the Bank would not be able to dispose of the claims and other applications for loans submitted by the employees of the Bank. The proposal to transfer 50% of P.F. accumulation was also not agreed and it was further informed that what is required is to transfer the full amount and OP 8586/1993 13 to furnish its details for enabling the petitioner to proceed with the matter. Finally, the Bank reiterated their stand that what is required is to transfer the funds with the first respondent and to furnish the details for enabling the Bank to administer the scheme effectively, as partial transfer of funds would not serve any purpose. It was also informed that till the matter is settled as above, the petitioner has no other alternative but to send the application for loans, etc. of the employees to meet their lawful claims. 18. In Ext.P9 it was informed by the first respondent that the if the Bank do not want to continue the Schemes under the Act or no reply is received before 4.6.1993 it will be presumed that the Bank is not interested in the continuation of the Scheme and in that event the first respondent will be closing the accounts of the members as on 30.9.1992, i.e. the month in which 19A petition was heard and judgment pronounced by the Central Government. It is offered that 85% of the total accumulations of the members would be transferred by cash to the trustees with memberwise details before 25.6.1993 and the balance amount would be transferred in the shape of securities by the Head Office of the first respondent. It is further informed that the contributions made by the petitioner beyond 30.9.1992 would be refunded with interest as provided in the rules. In Ext.P10, the Bank wanted implementation of Ext.P3 by complying various steps as OP 8586/1993 14 suggested therein. It was also informed that until the PF, Family Pension and Deposit Linked Insurance Scheme accumulations and full particulars of the amounts standing to the credit of each employee are transferred/furnished to the Bank, the first respondent will continue to pay interests thereon and meet payments/withdrawals/liabilities arising under each of them as and when they arise or as they continue. By Ext.P11, it was informed by the first respondent that the P.F. balance as on 30.9.1992 will be transferred. By Ext.P12, the Bank informed that the order should be implemented not partially, but fully by transferring the P.F. balance and related amounts. Finally, Ext.P13 was issued by the first respondent. 19. Learned Senior Counsel appearing for the petitioner submitted that the present stand of the first respondent goes against the admissions made before this Court while passing the interim order dated 25.9.1995 wherein it was submitted on behalf of the first respondent that the entire amount collected by the Regional Provident Fund Commissioner by way of provident fund contribution and family pension fund would be returned with accumulation of interest. It is pointed out that in Annexure I statement filed along with the verified petition dated 30.11.2006 also various admissions have been made. 20. As already noticed, this Court passed a detailed interim order OP 8586/1993 15 dated 25.10.2006. I.A. No.16834/2006 was filed by the Bank thereafter producing the minutes as well as the statement showing the balance amount due. The items wherein both parties have agreed and the disputes which still persisted, have been detailed in para 7 of the affidavit. It shows that there was total agreement with regard to the total amount of E.P.F. accumulation as on 30.9.1992, viz. Rs.20,56,34,994/-; the amount transferred on 10.9.1993, viz. Rs.17,63,00,000/-; the balance amount to be transferred as Rs.2,93,34,994/-; the amount of contributions paid to the E.P.F. Organisation during the period October 1992 to May 1993 was Rs.2,17,46,302/- and the amount transferred back from the E.P.F. Organisation on 27.10.1995 was Rs.1,99,32,776/-; the balance amount to be transferred to the P.F. Trust was Rs.18,13,526/- which represented the difference in the contributions paid during October 1992 to May 1993 and the amount paid by the E.P.F. Organisation on 27.10.1995 to the Federal Bank Employees Provident Fund Trust. Understanding could be reached with regard to Family Pension Fund, and administrative charges from 2.3.1985 to September, 1992 and Employees Deposit Linked Insurance Premium and administrative charges for the same period, that they will have to be refunded to the Bank. 21. No agreement could be reached in respect of the following items: OP 8586/1993 16 (a) With respect to the value of security transferred by the E.P.F. Organisation. Face value was taken into consideration by the first respondent, whereas the petitioner demanded market value on the securities as on 19.2.1996; (b) Family Pension amount as on 2.3.1985 with future interest; (c) percentage of interest due from the E.P.F. Organisation and allied disputes. It is the case of the petitioner that the accumulations on the contributions in the individual accounts of the employees must carry interest at the rates applicable to the contributions in the individual employee accounts as offered by the Trust from time to time and compound interest. It is pointed out that if the first respondent transferred the said amount in 1992 itself, the amount could have been credited to the individual accounts of the employees then and there and they would have earned interest on compounding basis at the rates applicable to the Provident Fund amounts held with the Trust. 22. Annexure I statement filed by the first respondent dated 30.11.2006 mentions about the various deliberations. The claim with regard to actual market value payable of the securities has been disputed. The first respondent did not accept the demand to transfer Family Pension Scheme contributions as on 2.3.1985 for various reasons stated in para 2(i) to 2(iii). Only withdrawal benefit taking the date of leaving service as on 2.3.1985 OP 8586/1993 17 was offered. With regard to the said aspect, in para 2(v) it was stated that in case the employees of Federal Bank authorise the Federal Bank EPF Trust to collect the said amount on their behalf, their eligible payment can be made to the Federal Bank EPF Trust provided the Trustees give a declaration that the amount will be credited to the individual accounts of the beneficiary members maintained by them. In para 3, it was stated that with regard to Family Pension Fund contribution from 2.3.1985 to September 1992, Administrative Charges during this period, Empoyees Deposit Linked Insurance premium paid for the said period and Administrative Charges during the period, there is no dispute that the Provident Fund Organisation has to refund the Federal Bank/Federal Bank EPF Trust, contributions and other charges collected after 2.3.1985 onwards, if the Bank's status as an “excluded establishment” is confirmed. Reference is made to the pendency of O.P. No.25270/2000. 23. As already noticed, since the various disputes persisted and the first respondent refused any liability to apply para 60 of the Scheme, this Court appointed the Chartered Accountants to verify the accounts after going into the respective claim statements. 24. The two detailed reports made by the Chartered Accountants are now to be gone into, to find out the sustainability of the respective claims. OP 8586/1993 18 After the appointment of the Chartered Accountants, they have formulated the various points of reference by communication dated 21.12.2010 which was produced by the first respondent along with a verified petition dated 15.1.2011. Para 2 of the said communication gives the points of reference as follows: “2. Based on the above we have formulated the following points of reference / scope of work to be done: (i) Verification of the individual account balances of all the employees covered at the time of transfer of the Provident Fund balance including the principal amount credited to individual employee accounts, interest credited to such accounts, withdrawals made from the said accounts etc. to arrive at the final balance. (ii) Verification of the method of computation of interest credited to the employees account balances before its transfer to Federal Bank managed Provident Fund Trust. (iii) Verification of the arithmetic accuracy of the interest credited to the employees account balances before its transfer to Federal Bank managed Provident Fund Trust. (iv) Verification of the method of computation and arithmetic accuracy of the interest figures as shown in the claim statement submitted by the Regional Provident Fund Commissioner. (v) Verification of the accumulated balance of contributions made towards Family Pension Fund claimed to be made by Federal Bank till March 1985 and not yet received till date. (vi) Verification of the balance of contribution to Family OP 8586/1993 19 Pension Scheme as at September 1992, claimed to be made by Federal Bank during March 1985 to September 1992 and not yet received as per their Claim Statement. (vii) Verification of the balance contribution towards Administrative charges as at September 1992 claimed to be made by Federal Bank during March 1985 to September 1992 and not yet received as per their Claim Statement. (viii) Verification of the balance of contribution made as EDLI premium as at September 1992 claimed to be made by Federal Bank during March 1985 to September 1992 and not yet received as per the Claim Statement. (ix) Verification of the balance of contribution towards EDLI Administrative charges as at September 1992 claimed to be made by Federal Bank during March 1985 to September 1992 and not yet received as per the Claim Statement. (x) Verification of the method of computation and the arithmetic accuracy of the interest claimed for delay in transfer of balance by the Federal Bank as per their claim statement.” 25. The first report was submitted on 9.3.2011. It shows that the individual balances were in respect of the entire 5375 employees, being the employees of the Federal Bank and members of the Provident Fund Scheme, as at 30.9.1992. In the audit findings, it was confirmed that the final balance payable under the said Scheme, amounts to Rs.20,56,34,994/- which tallies with the original claim statement filed by the Organisation as OP 8586/1993 20 payable as at the said date. It was accepted by the Bank also. With regard to point No.(ii), viz. verification of the method of computation of interest credited to the employees account balance before its transfer, the audit findings are as follows: “(i) The contributions received during the year on each employee account is collected for the full year and at the year end the total collections are added to the opening balance of the principal. (ii) Interest at the rate fixed by the Central Government under Para 60 of the Employees Provident Fund Scheme corresponding to that year is applied on the total opening balance at the beginning of the succeeding financial year. (iii) The above process continues year after year with the effect that interest amount as per the prescribed rate as above is compounded on a yearly basis. (iv) Hence we confirm that compound interest at the above prescribed rate is seen credited to the individual employees account balance till 30.9.1992, before its transfer to Federal Bank managed Provident Fund Trust. With respect to item (iv), viz. verification of the method of computation and arithmetic accuracy of the interest figures as shown in the claim statement, the audit findings are as follows: “(i) The Provident Fund Organisation could not explain the exact basis of the Method of calculation of the interest figures in the OP 8586/1993 21 Annexure 2 Original Claim Statement. (ii) As per the said claim statement both the Compound interest and Simple interest is calculated till 30.9.1995, and then their difference is deducted as not payable. However the Provident Fund Organisation could not explain the logic and reason for taking the above period for interest calculation and hence we cannot consider the said interest calculation as correct in the context of the Annexure 2 Original Claim Statement.” On certain other points like verification of the accumulated balance of contributions made towards Family Pension Fund claimed to be made by the Bank till March 1985 (point No.v), the audit finding is that the first respondent informed that the required details for the verification of the above point of reference is not readily available with them and a notional figure with calculation will be furnished later, and the same is the finding with respect to the claim made by the Bank towards contribution made to Family Pension Scheme as at September, 1992. Regarding point numbers (vi), (vii) and (viii) also the stand of the first respondent was similar, that details are not readily available. 26. The next important item is item No.(x), viz. verification of the method of computation and the arithmetic accuracy of the interest claimed for the delay in transfer of balance by the Bank as per their claim statement. In respect of this item, the audit findings are as follows: OP 8586/1993 22 “(i) The Federal Bank has claimed interest on the delay in receipt of the Fund Transfer from the Provident Fund Organisation. (ii) As represented to us vide letter No.HR Admn/T/PF Case/25615/2011 dated 08-03-2011, the Bank has calculated interest at the applicable EPFO interest rate with yearly compounding. The Bank has further represented vide the same letter that it has recalculated by applying the Federal Bank Employees Provident Rate also and has included in its Claim Statement as an alternative. (iii) However upon the verification of the method of computation in the above said Claim Statement filed by the Federal Bank with this Hon'ble Court, we find that the Bank has omitted to bring about the compounding effect at some places in the Claim Statement in conformity with their stated accounting policy and method, resulting in the short claim of interest due. The corrected amount of the total claim including interest on contributions / remittance made towards Family Pension Fund, EDLI, Administrative charges and EDLI Administrative Charges along with Provident Fund, has been found to be Rs.43,35,74,751/-. (iv) Further we have not received satisfactory explanation as to the inclusion of particular figures on 5 instances present in the workings for arriving at the figures in the Claim Statement and it is explained that the said figures were included at the initial suit filing time and hence not immediately traceable. (v) Considering the above points, we opine that the Claim Statement may need to be corrected to the extend specified in para OP 8586/1993 23 (iii) and (iv) above.” Therefore, an amount of Rs.43,35,74,751/- has been found as the corrected amount of the total claim, including interest on contributions/remittance made towards Family Pension Fund, EDLI, Administrative charges and EDLI Administrative Charges along with Provident Fund. 27. Thereafter, a verified petition along with Ext.R1(a) calculation sheet of Provident Fund dues was filed by the first respondent on 6.4.2011, stating that going by the said calculation sheet, an amount of Rs.2,00,70,381/- has been paid as excess payment to the Bank. It shows that after taking the opening balance as on 1.4.1985 simple interest has been added for various items and accordingly the excess amount has been arrived at. Later, an affidavit dated 9.4.2011 was filed on 11.4.2011 producing the same calculation sheet as Annexure III. This does not include the other items like Family Pension Fund, Employees Deposit Linked Insurance, Administrative Charges, etc. Regarding the computation of interest, the application of compounding rate under Para 60 of the Scheme is disputed therein. Reliance is placed on the Manual of Accounting Procedure. The stand taken in the affidavit thus is that after 2.3.1985 the amount credited to the individual account will not get the benefit of compound interest and the amount when transferred to M/s. OP 8586/1993 24 Federal Bank Ltd. will only carry simple interest. With regard to Family Pension Scheme, Administrative Charges, etc. also various objections have been raised. Finally, it is averred that the statement may be treated as an objection to the audit report and the claim of the petitioner Bank may be fixed taking into account the said statement. 28. The petitioner has filed a detailed reply to the same. In the statement filed by the petitioner on 11.4.2011, the following aspects have been pointed out. While disputing the contention by the first respondent that interest at compound rate is not payable, it is pointed out that during the period from 1985 to 13.9.1992, 42 employees had retired and the Provident Fund Authorities had paid and settled their Provident Fund dues and paid the balance amount of contribution credited in their individual account together with interest at compound rate according to the provisions of the Scheme. Thus, from 1985 onwards they had been settling the account with compound interest and not simple interest, Between 30.9.1992 till 31.3.1993, 13 employees had retired and they were also paid the balance amount of contribution by the first respondent with interest at compounded rate credited in the individual accounts by the first respondent. It is also pointed out that from 31.3.1993 till 31.3.2011, 946 employees had retired or deceased while in the service of the petitioner and their OP 8586/1993 25 provident fund amounts in the individual accounts as on 30.9.1992 transferred to the petitioner Bank, has been paid and settled with their further contributions on the basis of the ledger accounts furnished by the first respondent with compound interest credited in their accounts. The accounting procedure relied upon by the first respondent under the Manual of Accounting Procedure, has also been disputed by pointing out that this is contrary to the statutory provisions of the Provident Fund Scheme. Paragraphs 59, 60, 69(1)(e)(ii), 72 and 73 of the Scheme have been relied upon. 29. The second report filed by the Chartered Accountants is dated 24.6.2011. With regard to the claim statement filed by the first respondent, produced as Annexure III along with the affidavit dated 9.4.2011, after verifying the various details, in para 2 of the report how the rate of interest as per para 60 of the Scheme but not on a compounding basis, has been applied, was referred to and the Audit findings are as follows: “Audit Observation/Finding: We have verified the Annexure - I attached to and forming part of the fresh claim statement submitted before the Hon'ble Court, detailing the simple interest calculation on the opening balance for the period from 01-04-1985 to 30-09-1992 and report that simple interest has been consistently calculated on the opening balance. However, we further report that the interest OP 8586/1993 26 calculated on the above confirmed opening balance for the said period amounts to Rs.4,04,54,231/-. It may be noted that the said Para 60 provides for interest calculation on running account balance basis for the members of the PF Scheme.” Para 4 of the report and its Audit findings are re-produced below: “4. The rate of interest as per Para 60 of the Employees Provident Fund Scheme, but not on a compounding basis, corresponding to each year, is calculated on the contributions received from 01-04- 1985 till 30-09-1992, on a month wise basis, and then added to the above mentioned opening balance. Audit Observation/Finding: We have not been provided with any records to verify the monthly contributions made by Federal Bank for the period from 1.4.1985 till 30.9.1992. It may further be noted that the Ledger Accounts of individual employees does not contain the details of monthly contributions, but contains the contributions made during the entire year as a single amount. Hence, we hereby report that we are unable to confirm on the accuracy of the amount included in the revised claim statement in the above respect for want of supporting records.” Para 6 and its Audit findings are also reproduced below: “The rate of interest as per Para 60 of the Employees Provident Fund Scheme, but not on a compounding basis, corresponding to each year, is calculated on the withdrawals/transfer out/final settlements effected from the account balance during the period from 02-03- 1985 to 30-09-1992, and then deducted from the above said sum OP 8586/1993 27 total to arrive at the final figure transferable to Federal Bank as at 30-09-1992. Audit Observation/Finding: Upon Verification it is found that interest on withdrawals are made on the closing balance by assuming that the entire withdrawals / transfer out / final settlements have been effected on the first day of each year, which is not correct. The correct method should be to collect the withdrawals / transfer out / final settlements effected from each account on a monthly basis and then to apply the rate for the remaining period to arrive at the total interest figure. In the absence of the details of monthly withdrawals / transfer out / final settlements from the individual Provident Fund Accounts we hereby report that we are unable to confirm on the accuracy of the amounts included in the revised claim statement in the above respect for want of supporting records.” Finally in paragraphs IV, V and VI the findings are recorded as follows: “IV. We have completed the assignment based on the explanation and information given to us, that the underlying records available to properly substantiate and independently verify the correctness of the amounts included in the revised claim statement is the individual ledger accounts of the employees. We have also relied on the consolidated statement of the total balance of Federal Bank Ltd. with the Provident Fund organisation as at the date of transfer of 30-09-1992 confirming the amount payable as Rs.20,56,34,994/-. However we find that 239 ledger accounts not included in the said consolidated statements as active accounts is not available for OP 8586/1993 28 verification. V. Subject to and to the extend of our comments / findings / confirmations made in this report, the claim statement prepared by the Office of the Provident Fund Commissioner, Kochi is not fully substantiated with the underlying records made available for our verification. VI. Because of non availability of the records / details of the monthly contributions added and withdrawals / transfer out / final settlements effected from the employees accounts, for verification, we hereby report that we are unable to confirm the correctness of the revised claim statement.” Going by the above, it can be seen that the claim statement filed by the first respondent is not fully substantiated by the underlying records and the Chartered Accountants are unable to form the correctness of the claim statement. Thus, learned Senior Counsel appearing for the petitioner submitted that the report dated 9.3.2011 of the Chartered Accountants has to be accepted and no credence can be given to the statement filed as Annexure III along with the affidavit dated 9.4.2011 of the first respondent. 30. The important question therefore is whether as contended by the learned Senior Counsel for the first respondent, after 2.3.1985 only simple interest alone can be applied. The relevant provisions of the Scheme therefore requires consideration. Clause 59 deals with “Members' OP 8586/1993 29 Accounts” and Clause 60 deals with “Interest”. They are re-produced below: “59. Members' Accounts.-- (1) An account shall be opened in the office of the Fund in the name of each member in which it shall be credited -- (a) his contributions. (b) the contributions made by the employer in respect of him, and (c) interest as provided in paragraph 60. (2) All items of account shall be calculated to the nearest rupee, 50 paise or more to be counted as the next higher rupee and fraction of a rupee less than 50 paise to be ignored. (3) On receipt of the contribution card or cards of a member from his employer or employers at the end of the period of currency of the contribution card, the Commissioner shall compare the entries made in the contribution card or cards with those made in the member's individual account in the office of the Fund and shall rectify any discrepancy found in these entries. 60. Interest.-- (1) The Commissioner shall credit to the account of each member interest at such rate as may be determined by the Central Government in consultation with the Central Board. (2) (a) Interest shall be credited to the member's account on monthly running balance basis with effect from the last day in each year in the following manner:-- OP 8586/1993 30 (i) on the amount at the credit of a member on the last day of the preceding year, less any sums withdrawn during the current year -- interest for twelve months; (ii) on sums withdrawn during the current year --interest from the beginning of the current year upto the last day of the month preceding the month of withdrawal; (iii) on all the sums credited to the member's account after the last day of the preceding year -- interest from the first day of the month succeeding the month credit to the end of the current year; (iv) the total amount of interest shall be rounded to the nearest whole rupee (fifty paise counting as the next higher rupee) (b) In the case of a claim for the refund under paragraph 69 or 70, interest shall be payable up to the end of the month preceding the date on which the final payment is authorised irrespective of the date of receipt of the claim from the claimant concerned.” (Provisos and sub-clauses (3) to (5) omitted) Clause 69 deals with the circumstances in which accumulations in the Fund are payable to a member. Sub-clause 1(e)(ii) is applicable as far as the present case is concerned and the relevant clause is re-produced below: “69. Circumstances in which accumulations in the Fund are payable to a member.-- (1) A member may withdraw the full amount standing to his credit in the Fund-- OP 8586/1993 31 (e)(ii) where a member is transferred from a covered factory or other establishment to another factory or other establishment not covered under the Act, but is under the same employer.” Clause 72(1) relates to “payment of Provident Fund” which states as follows: “72. Payment of Provident Fund.-- (1) When the amount standing to the credit of a member becomes payable, it shall be the duty of the Commissioner to make prompt payment as provided in this Scheme. In case there is no nominee in accordance with this Scheme or there is no person entitled to receive such amount under sub-paragraph (ii) of paragraph 70, the Commissioner may, if the amount to the credit of the Fund does not exceed Rs.10,000/- and if satisfied after enquiry about the title of the claimant, pay such amount to the claimant.” Clause 73 deals with “Annual statement of member's account” which also states as follows: “73. Annual statement of member's account.-- (1) As soon as possible after the close of each period of currency of contribution card the Commissioner shall send to each member through the employer of the factory or other establishment in which he was last employed a statement of his account in the Fund showing the opening balance at the beginning of the period, amount contributed during the year, the total amount of interest credited at the end of the period or debited in the period and the closing balance at the end of the period. OP 8586/1993 32 (2) Members should satisfy themselves as to the correctness of the annual statement and any error should be brought to the notice of the Commissioner within six months of the receipt of the statement.” Therefore, it can be seen that under Clause 59 (1)(c), interest as provided in paragraph 60, has to be credited to the account of each member. It is evident that under Clause 60(2)(a), interest shall be credited to the member's account on monthly running balance basis with effect from the last day in each year in the manner prescribed therein. Therefore, it is a case where the interest portion has to be compounded from time to time which will be credited to the account of the member. Going by clause 69(e)(ii) a member is entitled to withdraw the full amount standing to his credit in the Fund in case where a member is transferred from a covered factory or other establishment to another factory or other establishment not covered under the Act. Clause 72 shows that the amount standing to the “credit” of the member is payable and the Commissioner has to make a prompt payment. Clause 73 shows that the annual statement should contain the opening balance at the beginning of the period, amount contributed during the year, the total amount of interest credited at the end of the period or debited in the period and the closing balance at the end of the period. 31. In the light of Sections 5 and 5A of the Act, it cannot be disputed OP 8586/1993 33 that the amount is held in Trust by the first respondent for the members. Section 5 of the Act provides for the framing of the Scheme, viz. Employees' Provident Fund Scheme for the establishment of provident funds under the Act and the Fund shall vest in, and be administered by the Central Board constituted under Section 5A of the Act. Therefore, the accumulations in respect of each of the members are held in Trust by the effect of the said provisions. Evidently, the first respondent had applied the provisions of Para 60 of the Scheme while transferring the amounts and now they have gone back on the same by taking recourse to the contention that it is an excluded account and not an exempted one. 32. That the Scheme has ceased to be in operation in respect of the Bank when branches were opened outside the State, is no longer in dispute. According to the Bank, it was in 1973. The said dispute was resolved by Ext.P3 order by the Central Government. The relevant date of de-coverage fixed by Ext.P3 is 2.3.1985, the date when Ext.P1 objection was filed by the Bank. Even after 1985 there cannot be any dispute that contributions have been received, funds have been operated, claims were being settled and loans were being sanctioned. Demands were being made to remit the contributions as evident from Ext.P1 reply submitted by the Bank. Even after Ext.P3 order was passed, because of the non transfer of the amounts to OP 8586/1993 34 the Bank and the Trust held by the Bank, the Bank had no other go but to forward the claims of employees seeking loans, retired persons as well as deceased. In respect of those persons who have been granted the amounts, as averred in the reply statement filed by the petitioner on 11.4.2011, it can be seen that the first respondent had paid the balance amount of contribution credited in the individual account of 42 employees who retired between 1985 to 13.9.1992, together with interest at compound rate, as per the Scheme. This is so in the case of 13 employees retired between 30.9.1992 till 31.3.1993. After 31.3.1993 also till 31.3.2011 the individual accounts of the member employees to the petitioner Bank, have been settled on the basis of ledger accounts furnished by the first respondent with compound interest credited by the first respondent in their accounts. 33. Therefore, there is no merit in the contention now raised that simple interest alone can be applied. Even though learned Senior Counsel for the first respondent submitted that the first respondent was administering the fund after Ext.P3 order was passed because of the request made by the petitioner alone, the same cannot be accepted in the light of the various correspondences between the parties. The petitioner has been repeatedly requesting by various letters, the requirement to transfer the amounts with the full particulars of the amount standing to the credit of each employees OP 8586/1993 35 without delay and the liability to meet the payments towards withdrawals as well as payment of interest for any delay on such transfer. This is evident from Exts.P3, P6, P8 and P10 letters from the Bank. Therefore, the first respondent had to transfer the amounts and to furnish the details to the petitioner for administering the Scheme. 34. Evidently, when 85% of the amounts were transferred by the first respondent, they had quantified the amounts after applying interest under para 60 of the Scheme, even though now they are trying to go back upon the same. The audit findings in the report dated 9.3.2011 of the Chartered Accountants shows that point No.2 also supports the above. It is certified that interest at the rate fixed by the Central Government under para 60 of the Scheme corresponding to that year is applied on the total opening balance at the beginning of the succeeding financial year and the above process continues year after year with the effect that interest amount as per the prescribed rate as above is compounded on a yearly basis. Thus, the Chartered Accountants have also confirmed that compound interest has been credited to the individual employee's account till 30.9.1992 before it is transferred to the Federal Bank Employees Provident Fund Trust. 35. In this context, learned Senior Counsel for the petitioner relied upon the principle stated by the Apex Court in Sandvik Asia Ltd.'s case OP 8586/1993 36 {(20060 2 SCC 508}. That was a case arising under the Income Tax Act. There was long delay of 12 to 17 years for refund of amount from the date when it became due, by which the department had to pay interest. Learned Senior Counsel for the first respondent submitted that the said principle was applied on the peculiar facts of the case and based on the provisions of Sections 214 and 244(1-A) of the Income Tax Act, 1961. It is submitted that herein, the Manual of Accounting Procedure alone will apply and reference is made to para 14 of Chapter 6 which reads as follows: “14. Related refund of contribution: Where the amount of contributions received and not required to be credited to the individual account of the member owing to wrong coverage, voluntary or erroneous deposit etc. such amount is refundable along with interest. The interest on such refunds should be credited on each month total amount of contributions at simple interest from the first day of the month following that on which the amount was received to the month preceding that of refund i.e. contributions of Rs.1,000/- for March, 1996 received on 15th April, 1996 will fetch simple interest from 1.5.1996 at the declared rate.” Evidently, the same has no application here. The same could be adopted in a case where contributions have been received and were not required to be credited to the individual account of the member owing to wrong coverage voluntary or erroneous deposit. The situation herein is evidently not OP 8586/1993 37 identical. This is a case where there was coverage and finally the operation of the Act and the Scheme ceased to be there in view of Ext.P3 order. Apart from that, the provisions of Clauses 59 and 60 of the Scheme already adverted to, show that interest is payable as such which has to be accounted every year and balance arrived at by treating the same as a monthly running balance basis, as evident from para 60 (2)(a) of the Scheme. Therefore, when the Scheme itself provides for a particular method for crediting the interest and as para 59 obliges the crediting of interest as provided in para 60, which was being done by the first respondent also throughout, now they cannot turn round and try to wriggle out of the liability. It is a case where the amount is not due to the petitioner Bank. It is the individual account of each of the members that was being operated and maintained. They are the beneficiaries of the Scheme. The amount is held in trust also. In that view of the matter, the trustee cannot wriggle out of the obligations under para 60 of the Scheme. In the decision relied upon by the learned Senior Counsel for the first respondent in S.L. Arora's case (AIR 2010 SC 1511) in para 9 while referring to the award of compound interest, it was held as follows: “Compound interest can be awarded only if there is a specific contract, or authority under a Statute, for compounding of interest. OP 8586/1993 38 There is no general discretion in courts or tribunals to award compound interest or interest upon interest.” Evidently, herein, as already noticed, para 60 of the Scheme applies and as evident from the report of the Chartered Accountants also, when the balance is arrived at each year by adding interest and interest is credited in the succeeding year in that manner, it becomes a compound rate of interest. 36. The other decision relied upon by the learned Senior Counsel for the petitioner is that of the Apex Court in Sindhu's case (2006 (2) KLT 785 - SC). Therein, the question considered was in respect of a lapsed L.I.C. policy. The Apex Court held that Life Insurance Corporation of India is not liable to pay interest in regard to premiums paid from respective dates of payment of premiums to date of settlement. It was held that “payment of interest on the premium amounts from the respective dates of remittance of premiums, is alien to the concept of life insurance.” It was also held that “the amount that is paid by LIC in regard to a lapsed policy is not “refund of the premiums paid on various dates”, but a reduced lump sum instead of the assured sum.” The situation herein is not at all similar. While relying upon the Manual of Accounting Procedure, learned Senior Counsel tried to draw support from the decision of the Apex Court in Dhananjay Malik v. State of Uttaranchal {(2008) 4 SCC 171}. Therein, the question OP 8586/1993 39 was considered in the light of the power of the Government to issue administrative instructions to fill in the gap when statutory rules are silent on a particular point. It was held in para 14 thus: “14. A Constitution Bench of this Court in Sant Ram Sharma v. State of Rajasthan (AIR 1967 SC 1910) has pointed out at AIR p. 1914 that the Government can amend or supersede statutory rules by administrative instructions, but if the rules are silent on any particular point, the Government can fill up the gap an supplement the rules and issue instructions not inconsistent with the rule already framed.” Herein, as evidently seen, it is not a case where the Scheme is silent on the way in which interest has to be applied, going by paragraphs 59 and 60 of the Scheme. Therefore, the said principle cannot also apply to the facts of this case. 37. The contention vehemently raised by learned Senior Counsel for the first respondent Shri N.N. Sugunapalan is that being an excluded Scheme, para 60 cannot be applied. As rightly pointed out by the learned Senior Counsel for the petitioner, the term “excluded employee” is defined in Clause 2(f) of the Scheme which is as under: “(f) “excluded employee” means -- (i) an employee who, having been a member of the Fund, withdrew the full amount of his accumulations in the Fund under OP 8586/1993 40 clause (a) or © of sub-paragraph (1) of paragraph 69; (ii) an employee whose pay at the time he is otherwise entitled to become a member of the Fund, exceeds six thousand and five hundred rupees per month;” (iii) omitted In fact, both the contingencies provided therein are not attracted here. Apart from that, the first respondent did not agree to the objection raised by the petitioner Bank as early as on 2.3.1985. They were disputing the same, sticking on their power to operate the fund which had to be ultimately decided by the Central Government by Ext.P3 order, in 1992. Every year they were applying interest as per Clause 60 of the Scheme and crediting it to the member's account. Therefore, the order Ext.P3 will not go to the benefit of the first respondent to deny interest payable as per the Scheme to the individual members of the Fund. That will defeat the object of the beneficial provisions of the Act as well as the Scheme. Therefore, the stand taken by the first respondent cannot be accepted. 38. The next question is with regard to the liability to pay administrative charges. Herein, learned Senior Counsel Shri N.N. Sugunapalan contended that the first respondent is not liable to refund the same, as they were administering the fund. The first respondent had not divested itself of the fund in spite of several demands by the petitioner. The OP 8586/1993 41 petitioner was therefore compelled to pay the administrative charges. In fact, the argument now raised is self contradictory also. For denying their liability to pay interest as per para 60 of the Scheme, the contention raised is that they were not liable to administer the funds. But to deny the liability to refund the administrative charges what is argued is that the same is not liable to be refunded, since they were administering the funds. Evidently, the first respondent was holding the amounts as trustees on behalf of the members. This is so in the case of Employees Deposit Link Insurance Scheme also. 39. As already noticed, even at the time when the interim order was passed by this Court in C.M.P. No.26115/1995 it was admitted on behalf of the first respondent that the amount collected by way of provident fund contribution and family pension fund will be returned with accumulation of interest, if any. The same is binding on the first respondent. In Annexure I statement filed along with the verified petition dated 30.11.2006, the liability to transfer the Family Pension Fund Scheme amounts after 2.3.1985, is not disputed and in para 3 with regard to the amounts paid to the E.P.F. Organisation for the period from 2.3.1985 to September, 1992 towards Family Pension Fund Contribution, Administrative Charges, Employees Deposit Linked Insurance premium and Employees Deposit OP 8586/1993 42 Linked Insurance Administrative Charges, it is stated that there is no dispute that the E.P.F. Organisation has to refund the Federal Bank / Federal Bank E.P.F. Trust, contributions and other charges collected after 2.3.1985 onwards if the Bank's status as on “excluded establishment” is confirmed. Evidently, O.P.No.25270/2000 was allowed. The stand now taken with regard to the obligation to transfer the Family Pension Fund Scheme, Administrative Charges, etc. upto 2.3.1985, is therefore un-understandable. Once the de-coverage is ordered by Ext.P3, the stand that they can administer the funds even after 1985, cannot be accepted. Therefore, any amount towards Family Pension Scheme, Employees Deposit Linked Insurance minus the benefit already granted, are transferable with interest. Evidently, there cannot be any dispute regarding the requirement to transfer other amounts like Family Pension Fund, Employees Deposit Link Insurance Scheme and other related charges. If the interest is not credited to the individual account of the employees in terms of para 60 of the Scheme, it will cause great hardship to them also, as rightly pointed out by the learned Senior Counsel Shri Pathrose Mathai appearing for the petitioner which is supported by Smt. Sumathi Dandapani, learned Senior Counsel appearing for the additional 5th respondent. The amounts were withheld and only because of the interim orders passed by this Court from OP 8586/1993 43 time to time, they were transferred. There is no justification for not transferring the full amount in spite of Ext.P3 order passed by the Central Government. Even though in the statement filed o n 30.11.2006, reliance was again placed on the subsequent notification which was under challenge before this Court by the petitioner Bank and other allied Banks in O.P.No.25270/2000, evidently there was an interim order in force. Therefore, the pendency of the said case will not help the first respondent. In fact, as noticed above, the first respondent has gone back on certain items admitted in Annexure I statement also. Therefore, there is no justification in the stand now taken that there is excess payment to the tune of Rs.2 crores and above. Evidently, in the second report filed by the Chartered Accountants, it is pointed out that many of the items shown in the claim statement filed by the first respondent, are not correctly arrived at. Hence, the report dated 9.3.2011 of the Chartered Accountants will have to be accepted, so as to determine the issues raised. 40. For all these reasons, the petitioner is entitled to succeed and the first respondent is liable to transfer the Employees Provident Fund, amount under Family Pension Fund Scheme, Administrative Charges and Employees Deposit Linked Insurance Administrative Charges and interest as applied under Para 60 of the Scheme as well as further interest for OP 8586/1993 44 delayed payment. 41. The report submitted by the Chartered Accountants on 9.3.2011 shows that the balance amount that is payable by the first respondent is Rs.43,35,74,751/- which represents the total claim including interest on contributions/remittance made towards Family Pension Fund, Employees Deposit Linked Insurance, Administrative charges and EDLI Administrative Charges along with Provident Fund. The same shall be refunded within a period of two months from the date of receipt of a copy of this judgment. It is also directed that the first respondent will have to pay interest at the current rate fixed by the Central Government for similar amounts from the date of the judgment till payment. There will be a further direction to the first respondent to furnish all particulars and details of contributions, loans as well as withdrawal benefits granted in the account of each of the employees/retirees of the Bank along with the funds directed to be transferred. The writ petition is allowed to the above extent. No costs. (T.R. Ramachandran Nair, Judge.) kav/ "