Disposed

Employees Provident Fund Organisation v. M/S.Kerala State Detergents and Chemicals Ltd. (Ksdc)

Kerala HC3 Jun 2024WP(C)/20938/2015

Case brief

AI extract

What is this about?

EPFO challenged a Tribunal order waiving Section 14B damages assessed against KSDC on the ground of absence of mens rea. The Court held mens rea is irrelevant to assessing statutory damages and there is no power to waive them, but reduced damages from 100% to 50% as the employer had ceased operations in 2006.

What did the court decide?

Writ petition disposed; damages under S. 14B EPF Act reduced from 100% to 50%, payable within one month.

Employees Provident Fund Organisation Vs… — Pension and Retirement Benefits | Kerala HC (2024)

¶1

IN THE HIGH COURT OF KERALA AT ERNAKULAM

¶2

PRESENT

¶3

THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH

¶4

MONDAY, THE 3RD DAY OF JUNE 2024 / 13TH JYAISHTA, 1946
WP(C) NO. 20938 OF 2015

¶5

PETITIONER:

¶6

EMPLOYEES’ PROVIDENT FUND ORGANISATION
SUB REGIONAL OFFICE, BHAVISHYA NIDHI BHAVAN,
P. B. NO. 1806, ERANHIPALAM P. O., KOZHIKODE – 673006.
REPRESENTED BY ITS ASSISTANT PROVIDENT FUND
COMMISSIONER (COMPLIANCE DIVISION).

¶7

BY ADV.

¶8

 SRI. THOMAS MATHEW NELLIMOOTTIL – SC – P. F.

¶9

RESPONDENTS :

¶10

1M/S. KERALA STATE DETERGENTS AND CHEMICALS LTD (KSDC),
KUTTIPURAM, MALAPPURAM DISTRICT,
REPRESENTED BY SRI. K. SUDHAKARAN.

¶11

2THE EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL,
SCOPE MINAR, 4TH FLOOR, CORE-2,
LAXMI NAGAR, DELHI-110092.

¶12

BY ADVS.
 SRI. P. BENNY THOMAS
 SRI. M. GOPIKRISHNAN NAMBIAR
 SRI. P. GOPINATH
 SRI. K. JOHN MATHAI
 SRI. JOSON MANAVALAN
 SRI. KURYAN THOMAS
 SRI. E. K. NANDAKUMAR SR.
 SRI. JAI MOHAN

¶13

THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
03.06.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

¶14

WP(C) NO. 20938 OF 2015

¶15

¶16

DINESH KUMAR SINGH, J.

¶17

W.P.(C) No. 20938 of 2015

¶18

Dated this the 3^rd day of June, 2024

¶19

JUDGMENT

¶20

The present writ petition has been filed impugning the order passed by the 2^nd respondent Tribunal in Exhibit P-1 whereby the damages assessed by the controlling authority under Section 14B of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter referred to as the ‘EPF Act’ for short) for an amount of Rs. 30,62,693/- have been waved off on the ground that the 1^st respondent did not have Mens rea to not deposit the PF contribution in the EPF Scheme.

¶21

Section 14B of the EPF Act on reproduction reads as under;

¶22

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 sub-section (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

¶23

WP(C) NO. 20938 OF 2015

¶24

¶25

Commissioner or such other 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 such damages, not exceeding the amount of arrears, as may be specified in the Scheme:]

¶26

[Provided that before levying and recovering such damages, the employer shall be given a reasonable opportunity of being heard]:

¶27

[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,subject to such terms and conditions as may be specified in the Scheme.]

¶28

From the proper construction of the provisions of Section 14B of the EPF Act it is evident that, the damages are statutory in nature and there is no application of Mens rea for assessing the damages. However, the controlling authority has discretion to levy

¶29

WP(C) NO. 20938 OF 2015

¶30

¶31

the damages up to 100% for the non payment or the short payment of the EPF contribution. This Court as well as the Supreme Court have held that Mens rea is not a factor for assessing the damages under Section 14B of the EPF Act.

¶32

The learned Counsel for the 1^st respondent submits that the 1^st respondent was a Government undertaking and it has stopped its operations in the year 2006 and its assets and liabilities were taken over by another Government Company. He therefore, submits that considering these facts, the Tribunal has exercised the discretion for waving off the assessed damages under Section 14B of the EPF Act and, therefore, this Court cannot be interfered with the discretion exercised by the Appellate Tribunal.

¶33

I have considered the submissions. There is no power to wave off the damages assessed under Section 14B of the EPF Act. However, there is discretion vested with the controlling authority to levy the damages up to 100%. Therefore, the findings of the Tribunal that, since there were no Mens rea for not depositing the PF contribution by the 1^st respondent is not justified. Mens rea is not a factor which can be taken into consideration while assessing the damages. However, considering the fact that the petitioner

¶34

Company had stopped its operation in 2006 and its assets and

¶35

WP(C) NO. 20938 OF 2015

¶36

¶37

liabilities were taken over by another Government Company, this Court finds it appropriate to reduce the damages from 100% to 50%. The 1^st respondent is therefore directed to deposit the damages @ 50% within a period of one month from today. If the petitioner fails to deposit the damages @ 50% within one month from today, the Provident Fund Organization will be free to take appropriate steps to realize the damages as per law.

¶38

with the aforesaid directions the present writ petition is disposed of.

¶39

Sd/DINESH KUMAR SINGH JUDGE

¶40

Svn

¶41

WP(C) NO. 20938 OF 2015

¶42

¶43

¶44

PETITIONER’S EXHIBITS

¶45

EXHIBIT P-1TRUE COPY OF THE ORDER DT.16-3-2013 IN ATA
262(7)/2011 OF THE EMPLOYEES PROVIDENT FUND
APPELLATE TRIBUNAL, NEW DELHI.

¶46

EXHIBIT P-2TRUE COPY OF THE APPEAL ATA 262(7)2011.

¶47

EXHIBIT P-3TRUE COPY OF THE COUNTER AFFIDAVIT FILED ON
BEHALF OF THE EPFO IN APPEAL ATA
262(7)2011.

¶48

EXHIBIT P-4TRUE COPY OF THE LETTER OF R1 DT.7-10-2014.
EXHIBIT P-5TRUE COPY OF THE LETTER DT.19-11-2014.
EXHIBIT P-6TRUE COPY OF THE MEMO NO.15.

Employees Provident Fund Organisation v. M/S.Kerala State Detergents and Chemicals Ltd. (Ksdc)

Case brief

What is this about?

What did the court decide?

Employees Provident Fund Organisation v. M/S.Kerala State Detergents and Chemicals Ltd. (Ksdc)

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

K.Balan Vs the Director, Indian Institute of Spices Research

M.Balakrishnan Vs the State Public Information Officer/Senior Superintendent

M. Balakrishnan Vs the State Public Information Officer/Senior Superintendent

Dr. J. Seetharaman Vs Employees Provident Fund Organisaion

K.C. Santhosh Vs Kerala State Beverages (M and M) Corporation Ltd.

General Manager, Vs Regional Provident Fund Commissioner