Dismissed

Kuriakose Alias v. the Asst. Provident Fund Commissioner

Kerala HC16 Nov 2012WP(C)/32835/2010

Case brief

AI extract

What is this about?

Petitioner, a defaulter under the EPF Act, challenged demands for damages and interest. Court held that Section 14B and Section 7Q demands are separate liabilities. Dicta distinguished Delhi HC judgment relying on an earlier circular due to a later scheme amendment.

What did the court decide?

Writ petitions 32835 of 2010 and 3728 of 2012 dismissed. Order remains.

Kuriakose Alias Vs the Asst. Provident Fund Commissioner — Banking and Recovery | Kerala HC (2012)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE

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FRIDAY, THE 16TH DAY OF NOVEMBER 2012/25TH KARTHIKA 1934

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WP(C).No. 32835 of 2010 (D)

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PETITIONER:

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KURIAKOSE ALIAS, MANAGING DIRECTOR, M/S.PAARELS IMPORTS & EXPORTS PVT.LIMITED, 9-D, ABAD MARINE PLAZA, NEAR HIGH COURT OF KERALA, MARINE DRIVE, KOCHI-18.

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BY ADVS.SRI.M.B.PRAJITH

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SRI.K.K.PREMALAL

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RESPONDENT:

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THE ASSISTANT PROVIDENT FUND COMMISSIONER & RECOVERY OFFICER, EMPLOYEE'S PROVIDENT FUND ORGANISATION, BHAVISHYANIDHI BHAVAN, KALOOR P.O., KOCHI-17.

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BY ADV. DR.S.GOPAKUMARAN NAIR (SR.) BY ADV.SRI.A.RAJASIMHAN, SC. BY ADV. SRI.M.CHANDRA BOSE

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 16-11-2012, ALONG WITH WPC. 3728/2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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WP(C).No. 32835 of 2010 (D)

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PETITIONER'S EXHIBITS:

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EXHIBIT P1 : COPY OF THE PROFIT AND LOSS ACCOUNT FOR THE YEAR 2000-2001. EXHIBIT P2 : COPY OF THE NOTICE DTD.02/10/2010. EXHIBIT P3 : COPY OF THE REPLY SENT BY THE PETITIONER TO EXT.P2.

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RESPONDENT'S EXHIBITS:-

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ANNEXURE R1(a) : COPY OF SHOW CAUSE NOTICE DTD.24/05/2010. ANNEXURE R1(b) : COPY OF PROCEEDING OF ASST.PROVIDENT FUND COMMISSIONER, KOCHI DTD.19/07/2010. ANNEXURE R1(c) : COPY OF PROCEEDINGS DTD 19/07/2010. ANNEXURE R1(d) : COPY OF NOTICE OF DEMAND TO DEFAULTER DTD.07/09/2010.

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True copy

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P.A. to Judge

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**A.M.SHAFFIQUE, J * * * * * * * * * * * * *** W.P.C.Nos.32835 of 2010

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& 3728 of 2012

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Dated this the 16^th day of November 2012

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J U D G M E N T

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Petitioner, admittedly a defaulter in paying the contributions under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as 'the Act') in time, was faced with a demand for damages under Section 14B of the Act by virtue of Ext.P2 and subsequently by Ext.P4, there was a demand for payment of interest under Section 7Q of the Act.

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Though a writ petition was filed challenging the demands and an interim order was obtained from this Court, subsequently the petitioner filed W.P.C.No.3728/2012 for the same reliefs.

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Heard learned counsel for the petitioner and learned Standing Counsel for respondent.

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W.P.C.Nos.32835& 3728 of 2012

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According to learned counsel for petitioner, now the petitioner does not seek to proceed with W.P.C.No.32835/2010 but only insists for consideration of W.P.C.No.3728/2012 since the second writ petition consolidates the contentions raised including an additional contention on the basis of Ext.P3 notification.

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Ext.P3 is a notification which had come into force on 29/05/1990 which indicates the rate of interest and the rate of damages to be imposed by the Provident Fund department in respect of delay in payment of contribution for different periods.

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According to learned counsel for the petitioner, the maximum rate of damages could only be 25% if the delay in paying contribution is over six months and interest chargeable under Section 7Q is 12%. According to learned counsel, Ext.P2 demand is pursuant to the said notification and therefore the department had no right to issue Ext.P4 demand which is under Section 7Q further imposing a liability to pay a total amount of Rs.3,11,918/- within 15 days. Therefore, it is argued that when the maximum rate of damages as well as interest is specified for delay in payment of contribution beyond six months, the department, having charged both the amounts in Ext.P2, cannot

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W.P.C.Nos.32835& 3728 of 2012

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impose a further liability on the petitioner by way of issuing Ext.P4.

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The department has filed a counter affidavit inter alia indicating that though the notification had been issued, the damages had been levied at the prescribed rate as mentioned in paragraph 32A of the scheme that came into force on 01/09/1991 which reads as follows:

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“ Recovery of damages for default in payment of any contribution:

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(1) Where an employer makes default in the payment of any contribution to the 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 of the Act or in the payment of any charges payable under any other provisions of the Act or Scheme or under any of the conditions specified under Section 17 of the Act, the Central Provident Fund Commissioner or such officer as may be authorised by the Central Government, by notification in the Official Gazette in this behalf, may recover from the employer by way of penalty, damages at the rates given below:-

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W.P.C.Nos.32835& 3728 of 2012

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Period of Default Rate of damages (% of arrears per annum)

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(a)	Less than two months	17
(b)	Two months and above but less than four months	22
(c)	Four months and above but less than six months	27
(d)	Six months and above	37

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The damages shall be calculated to the nearest rupees, 50 paise or more to be counted as the nearest higher rupee and fraction of a rupee less than 50 paise to be ignored.”

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In the light of the scheme which came into effect on 01/09/1991, it cannot be disputed that the circular issued by way of Ext.P3 will have no relevance and the department can impose damages on the basis of the provision under paragraph 32A of the scheme which prescribes 37% as the quantum of damages for default in payment of contribution beyond six months. Therefore, in the light of the amendment to the scheme, Ext.P3 will have no relevance and therefore it cannot be believed for a moment that Ext.P2 demand had been made under Section 14B

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W.P.C.Nos.32835& 3728 of 2012 5

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inclusive of interest under Section 7Q of the Act. Ext.P4 is a separate demand made under Section 7Q and the petitioner has the obligation to pay the said amount as well for the delayed remittance of the contribution. In regard to Ext.P2, no appeal has been filed though there is an appellate remedy under Section 7I of the Act.

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Learned counsel for the petitioner relies upon the judgment of the Delhi High Court in Systems and Stamping v. Employees Provident Fund Appellate Tribunal [2008-LLR-0485]. In that particular case, after referring to the circular dated 29/05/1990, the department was directed to calculate the amount payable by the appellant in that case for the various periods of default on the basis of circular dated 29/05/1990. Apparently, in this judgment, paragraph 32A of the scheme has not been referred to at all.

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In that view of the matter, I am not persuaded to accept the judgment of the Delhi High Court in this matter. I do not think that there is any other legal ground to interfere with the proceedings initiated by the Provident Fund department.

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W.P.C.Nos.32835& 3728 of 2012

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Accordingly the writ petitions are dismissed.

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(sd/-)

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(A.M.SHAFFIQUE, JUDGE)

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jsr

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