Writ petition challenging reduction of Section 14B EPF damages to 25% by the Appellate Tribunal. The court held that Section 14B does not mandate 100% penalty and quantum may be decided with reference to circumstances of default; the impugned order was upheld and the petition dismissed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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2024:CGHC:46560
NAFR
HIGH COURT OF CHHATTISGARH AT BILASPUR
WPL No. 223 of 2024
1 - Central Board Of Trustees Employees Provident Fund Through The Regional Provident Fund Commissioner - II (Rpfc) Block - D Scheme No. 32, Indira Gandhi Vyavsayik Parisar Pandri Raipur District Raipur (C.G.) 492004
... Petitioners
versus
1 - M/s Holy Cross Girls Higher Secondary School Through Its Principal Post Gholeng District - Jashpur (C.G.)
2 - The Central Government Industrial Tribunal Cum Labour Court/ Epf Applellate Tribunal Jablapur (M.P.)
... Respondents
For Petitioner : Mr. Sunil Pillai, Advocate For Respondent No.1 : Mr. Priyank Rathi, Advocate
SB.: Hon'ble Mr. Justice Deepak Kumar Tiwari
O rder on Board
27/11/2024
Digitally signed by SHYNA AJAY Date: 2024.11.29 16:19:54 +0530
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No.3/2024, an application seeking permission to implead respondent No.1 without specifying the name of its Principal.
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which was never decided. The Respondent-Establishment deposited the dues with some delay on 27.3.2008 and obtained the approval from the concerned District Education OfÏcer to transfer the amount of PF deposited in the Contributory Provident Fund kept in the Bank, for which, permission was granted on 19.5.2010 and thereafter, an amount of Rs.40,48,203/- was transferred from the Bank Account to the competent authority. Thereafter, the competent authority issued a notice on 15.6.2012 and imposed interest under Section 7Q of the Act to the tune of Rs.35,75,054/- and also imposed the damages under Section 14B to the tune of Rs.37,35,025/- vide order dated 4.9.2012, which was challenged by the Respondent-Establishment before the concerned Appellate Tribunal. The Appellate Tribunal partly allowed the appeal and the liability and assessment under Section 7Q of the Act was afÏrmed and the liability and assessment of the amount under Section 14B of the Act imposed by the order dated 4.9.2012 passed by of the competent authority, was reduced to 25% of the assessed amount.
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case at hand, no such eventuality happened with regard to the Respondent-Establishment and the Appellate Tribunal was having no authority to reduce the damages in terms of the statutory provision. Hence, no sympathy can be extended contrary to law in favour of respondent No.1. He would further submit that a similar matter came up before the Coordinate Bench of this Court vide WPL No.199/2013 (Central Board of Trustees Employees Provident Fund Organisation Vs. M/s. Vidyut Griha Higher Secondary Vidyalaya No.1 and another) {order passed on 15.12.2023}. In the aforesaid matter, this Court, has discussed the judgment rendered in the matter of Horticulture Experiment Station Gonikoppal, Coorg Vs. Regional Provident Fund Organization (2022 SCC OnLine SC 223) , in which, it was has held that any default or delay in payment of EPF contribution by the employer under the Act is a sine qua non for imposition of levy of damages under Section 14B of the Act and mens rea or actus reus is not an essential element for imposing penalty/damages for breach of civil obligations/liabilities. He further submits that the Tribunal has not assigned proper reasons for reducing penalty to the extent of 25%. Hence, learned counsel for the petitioner prays to allow the petition.
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defaults, amount involved and the reason for delay. He would further submit that earlier, the Respondent-Establishment had already deducted the CPF and after due approval from the District Education OfÏcer, which was obtained on 19.5.2010, the amount credited in the CPF Account was transferred to the EPF account in respect of the competent authority. The competent authority ignoring the said admitted fact and without discussing the said plea taken by the Respondent-Establishment, imposed penalty at 100% of the assessed amount. Hence, considering the facts’ situation of the case, the concerned Appellate Tribunal rightly corrected the same and reduced the same to the extent of 25% of the assessed amount. For the above assumption, he places reliance on the matter of CENTRAL BOARD OF TRUSTEES Vs. BAKE ‘N’ JOY HOT BAKERY AND ANOTHER (order dated 4.1.2024 passed in WPC No.35163 of 2019) passed by the High Court of Kerala and prays to dismiss the petition.
38. Mode of payment of contributions.- (1) The employer shall, before paying the member his wages in respect of any period or part of period for which contributions are payable, deduct the employee's contribution from his wages which together with his own contribution as well as an administrative charge of such percentage [of the pay (basic wages, dearness allowance, retaining allowance, if any, and cash value of food concessions admissible thereon) for the time being payable to the employees
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other than an excluded employee, as the Central Government may fix. He shall within fifteen days of the close of every month pay the same to the Fund [electronic through internet banking of the State Bank of India or any other Nationalised Bank [or through PayGov platform] [or through scheduled banks in India including private sector banks authorised for collection] on account of contributions and administrative charge]: [Provided that the Central Provident Fund Commissioner may for reasons to be recorded in writing, allow any employer or class of employer to deposit the contributions by any other mode other than internet banking.]
[(2) The employer shall forward to the Commissioner within twenty-five days of close of the month, a montly absract in such form as the Commissioner may specify showing the aggregate amount of recoveries made from the wages of all the members and the aggregate amount contributed by the employer in respect of all such members for the month:
Provided that an employer shall send a Nil return, if no such recoveries have been made from the employees:
Provided further that in the case of any such employee who has become a member of the Pension Funds under the Employees’ Pension Scheme, 1995, the aforesaid Form shall also contain such particulars as are necessary to comply with the requirements of that Scheme.]
[(3) The employer shall send to the Commissioner within one month of the close of the period of currency, a consolidated Annual Contribution Statement in Form 6-A, showing the total amount of recoveries made during the period of currency from the wages of each member and the total amount contributed by the employer in respect of each such member for the said period. The employer shall maintain on his record duplicate copies of the aforesaid monthly abstract and consolidated annual contribution statement for production at the time of inspection by the Inspector:]
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[Provided that the employer shall send to the Commissioner returns or details as required under sub-paragraph (2) and (3) above, in electronic format also, in such form and manner as may be specified by the Commissioner.]
11.Section 14B of the Act further stipulates the provision where an employer makes default in the payment of any contribution to the Fund. The said section reads thus :
14B. Power to recover damages .—Where an employer makes default in the payment of any contribution to the Fund[, the [Pension] Fund or the Insurance Fund] or in the transfer of accumulations required to be transferred by him under subsection ( 2 ) of section 15 [or sub-section ( 5 ) of section 17] or in the payment of any charges payable under any other provision of this Act or of [any Scheme or Insurance Scheme] or under any of the conditions specified under section 17, [the Central Provident Fund Commissioner or such other ofÏcer as may be authorised by the Central Government, by notification in the OfÏcial Gazette, in this behalf] may recover [from the employer by way of penalty such damages, not exceeding the amount of arrears, as may be specified in the Scheme:]
[Provided that before levying and recovering such damages, the employer shall be given a reasonable opportunity of being heard]:
[Provided further that the Central Board may reduce or waive the damages levied under this section in relation to an establishment which is a sick industrial company and in respect of which a scheme for rehabilitation has been sanctioned by the Board for Industrial and Financial Reconstruction established under section 4 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986), subject to such terms and conditions as may be specified in the Scheme.]
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4 . Having heard the learned counsel appearing for the petitioner and the learned counsel appearing for the 1st respondent, I am of the view that there is considerable merit in the contention taken by the learned counsel appearing for the 1st respondent. The facts which compelled the Tribunal to take a view that this was not a case where the damages had to be levied at 100% is spelt out in the order itself. These reasons have already been noticed by this Court while considering the submissions of the learned counsel appearing for the 1st respondent. Indeed, the requirement of mens rea and/oractus reus is no longer a necessary ingredient to be proved to impose damages. In Horticulture Experiment Station v. Provident Fund Organization,
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(2022) 4 SCC 516 after referring to HMT(supra), McLeod Russel (India) Ltd. (supra), Provident Fund Commr. v. RSL Textiles (India) (P) Ltd. (2017) 3 SCC 110, SEBI v. Shriram Mutual Fund, (2006) 5 SCC 361 & Union of India v.Dharamendra Textile Processors, (2008) 13 SCC 369 it was held:-
“15. Taking note of the exposition of law on the subject, it is well- settled that mens rea or actus reus is not an essential element for imposing penalty or damages for breach of civil obligations and liabilities.”
It is no doubt true that in Horticulture Experiment Station (supra), while dealing with the question of damages under the EPF Act, the Supreme Court followed the view in SEBI v. Shriram Mutual Fund (which was decided in the background of penalty provisions in the SEBI Act) that “a breach of civil obligation which attracts penalty in the nature of fine under the provisions of the Act and the Regulations would immediately attract the levy of penalty irrespective of the fact whether contravention must be made by the defaulter with guilty intention or not. We also further held that unless the language of the statute indicates the need to establish the presence of mens rea, it is wholly unnecessary to ascertain whether such a violation was intentional or not.” The above view in respect of penalty provisions in the SEBI Act, in Shriram Mutual Fund (supra) was followed by a three-judge bench of the Supreme Court inUnion of India v. Dharamendra Textile Processors (supra) (which was decided in the background of penalty provisions in the Income Tax Act). However, the said decision of the Supreme Court does not hold that 100% damages must be invariably imposed. The decision is also not authority for the proposition that the circumstances that led to the default cannot be considered while deciding the quantum of damages to be imposed. In the facts of the present case, the Tribunal has
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not set aside the damages under Section 14-B of the EPF Act. It has only reduced the quantum of penalty to 50%. This, in my view is permissible even when the requirement of mens rea and/or actus reus is no longer a necessary ingredient for levy of damages under Section 14-B of the EPF Act. It is to be noted that the provisions of Section 14B of the EPF Act do not prescribe that a penalty at 100% is to be mandatorily imposed.
Sd/-
(Deepak Kumar Tiwari) Judge
Shyna
2 issues framed by the court
Whether Section 14B of the EPF Act mandatorily requires imposition of damages at 100%, or whether the authority has discretion in fixing quantum.
Whether the Tribunal could reduce damages under Section 14B to 25% of the assessed amount despite absence of mens rea requirement.
Colour shows how this judgement treated each authority
Horticulture Experiment Station Gonikoppal, Coorg Vs. Regional Provident Fund OrganizationReferred¶7
(2022 SCC OnLine SC 223) · Who else cites this
Horticulture Experiment Station v. Provident Fund OrganizationExplained¶14
(2022) 4 SCC 516 · Who else cites this
4 provisions across 3 enactments
Central Board Of Trustees Employees Provident Fund through the Regional Provident Fund Commissioner - II
M/s Holy Cross Girls Higher Secondary School through its Principal
The Central Government Industrial Tribunal cum Labour Court/EPF Appellate Tribunal, Jabalpur (M.P.)
Deepak Kumar Tiwari
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
