Allowed

Trichirappalli Sarvodaya v. the Presiding Officer

Madras HC1 Apr 2021WP(MD)/12418/2011

Case brief

AI extract

What is this about?

The Madras High Court allowed the writ petition, setting aside orders imposing damages for EPF default. The court remitted the matter to the authority to reconsider the issue of mens rea before levying penalties.

What did the court decide?

Impugned orders set aside; matter remitted to respondent to consider mens rea and pass appropriate order within six months after personal hearing.

Trichirappalli Sarvodaya Vs the Presiding… — Labour and Industrial Disputes | Madras HC (2021)

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W.P.(MD)No.12418 of 2011

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BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED:01.04.2021 CORAM:

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THE HONOURABLE MR.JUSTICE M.DHANDAPANI W.P.(MD)No.12418 of 2011 and M.P.(MD)No.1 of 2011

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Tiruchirappalli Sarvodaya Sangh, Head Office at No.108, T.P.K.Road, Madurai – 625 001 Rep. by its Secretary.

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:Petitioner

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-versus-

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The Presiding Officer, Employees Provident Fund Appellate Tribunal, Scope Minar, Core-II-4^th Floor, Lakshmi Nagar, New Delhi – 110 092.

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The Assistant Provident Fund Commissioner, Employees' Provident Fund Organisation, Sub Regional Office, No.18, Shree Complex, Madurai Road, Tiruchirappalli. :Respondents

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Writ Petition filed under Article 226 of the Constitution of India, praying for the issuance of Writ of Certiorari, to call for the records from the file of the 1^st respondent herein in A.T.A.No.425(13)/2009 and to quash the order dated 06.06.2011 passed therein.

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For Petitioner :Mr.A.Sivasubramanian For Respondents:Mr.M.Palanimuthu,Standing Counsel for R2

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ORDER

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This writ petition has been filed by the petitioner seeking for the issuance of Writ of Certiorari to call for the records relating to the order dated 06.06.2011 passed by the 1^st respondent in A.T.A.No.425(13)/2009 and quash the same.

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2.The case of the petitioner is that the petitioner Sangh is a Society registered under the Societies Registration Act and now, amalgamated with one part of Tamil Nadu Sarvodaya Sangh. In the year 1997, as a part of celebration of “Golden Year of Indian Independence”, the Central and State Governments together declared a rebate of 40% of Kahdi and Silk Varieties, which was to be shared in the proportion of 25% and 15% by the Centre and State respectively. Based on the declaration, the petitioner sold the products on rebate at a reduced price. Due to non-releasing of rebate amount, all the Sanghs in Tamilnadu faced difficulty in running the business. In spite of many representations, no payment was made. While so, in the month of May 2009, the second respondent passed an order imposing penal damages of Rs.17,70,055/- under Section 14B and interest of Rs.5,76,468- under Section 7Q of the Employee's https://hcservices.ecourts.gov.in/hcservices/ Provident Funds and Miscellaneous Provisions Act, 1952 for the

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W.P.(MD)No.12418 of 2011

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period 1994-1995 to 2007-2008 on account of the delay in remitting the Provident Fund dues. Challenging the same, the petitioner preferred an appeal before the 1^st respondent in A.T.A.No.425(13)/ 2009 under Section 7-I of the Act. However, the 1^st respondent, vide its order dated 06.06.2011, dismissed the appeal. Aggrieved over the same, the present writ petition has been filed.

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3.The learned counsel appearing for the petitioner submits that due to non-releasing of rebate amount, the petitioner faced financial crisis, due to which, there was a delay in remitting the EPF contribution, which is neither willfully nor wanton. It is further submitted that though the petitioner explained sufficient cause for non-payment of EPF contribution in time, the second respondent, without considering the same, passed the order levying damages and interest, which unsustainable in law. The appellate Tribunal also, without considering the said facts, dismissed the appeal, which is non-est in law.

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4.The learned counsel for the petitioner further submits that it is not mandatory on the part of the authority to impose damages in each and every cases. The authority has to consider the prevailing situation for non-payment of contribution at the relevant point of time. Only if the authority comes to the definite conclusion, on the basis of materials, that there is no mens rea , then only, damages can be imposed. Attention of this Court was drawn to the decision of the First Bench of this Court in R.D.34

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Ariyakudi Primary Agricultural Co-operative Bank vs. Employees' Provident Fund Appellate Tribunal, New Delhi & Ors. and, therefore, submitted that similar order be passed in the present case as well.

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5.On the above contention, this Court heard the learned Standing Counsel appearing for the 2^nd respondent and perused the materials as also the decisions relied to by the learned counsel for the petitioner.

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6.Similar issue fell for consideration before the First Bench of this Court in R.D.34 Ariyakudi Primary Agricultural Co-operative Bank vs. Employees' Provident Fund Appellate Tribunal, New Delhi & Ors. A perusal of the facts of the said case reveal that in the said case, the company failed to remit the PF dues in time and being not satisfied with the explanation given by the Company to the showcause notice issued in the proceedings u/s 14-B of the Act, order levying damages was passed, which was challenged before the Appellate Tribunal, which was dismissed against which challenge was made before this Court. The First Bench, after referring to the decisions of the Hon'ble Supreme Court, remitted the matter to the authorities for consideration of the issue on the question of mens rea before levying damages. The relevant portion of the said order reads as follows:

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“5. Learned counsel for the appellant placed

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https://hcservices.ecourts.gov.in/hcservices/

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W.P.(MD)No.12418 of 2011

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reliance on the Judgment of the Hon'ble Supreme Court in Mcleod Russel India Limited v. Regional Provident Fund Commissioner, Jalpaiguri and others reported in MANU/SC/0561/2014 : (2014) 15 Supreme Court Cases 263, wherein, the Hon'ble Supreme Court has held as under:

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“11. In HMT Ltd., [ESI Corpn. v. HMT Ltd., MANU/SC/0488/2008 : (2008) 3 SCC 35 : (2008) 1 SCC (L&S) 558], this Court noted the beneficial nature of the ESIC Act – that subordinate legislation must conform to the provisions of the parent Act. Despite giving due regard to the use of the words “may recover damages by way of penalty”, and mindful that mens rea and actus reus to contravene a statutory provision are necessary ingredients for levy of damages, this Court set aside the interference of this Court vis-a-vis the imposition of damages and further held that imposition of damages by way of penalty was not mandated in each and every case. The dispute was remitted back to the High Court for fresh consideration, i.e. to proceed on the premise that the levy of penalty under the Act was not a mere formality a foregone conclusion or an inexorable imposition; and that the circumstances surrounding the failure to deposit the contribution of the employees concerned would also have to be cogitated upon. This decision does not prescribe that damages or penalties cannot or ought not to be imposed. Further, the presence or absence of mens rea and/or actus reus would be a determinative factor in imposing damages under Section 14-B, as also the quantum thereof since it is not inflexible that 100 per cent of the arrears have to be imposed in all the cases. Alternatively stated, if damages have been imposed under Section 14-B, it will be only logical that mens rea and/or actus reus was prevailing at the relevant time. We may also note that this Court had yet again reiterated the well-known but oft ignored principle that High Courts or any Appellate Authority created by a statute should not substitute their perspective of discretion on that of the lower Adjudicatory Authority if the impugned order does not otherwise manifest perversity in the process of decision taking. HMT Ltd. does not proscribe

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W.P.(MD)No.12418 of 2011

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imposition of damages; that would negate the interest of the legislature. The submission of the petitioner before us is that the liability was of the erstwhile management and since the petitioner was not the “employer” at the relevant time, default much less deliberate and wilful default on the part of the petitioner was absent. However, it seems to us that once these damages have been levied, the quantification and imposition could be recovered from the party which has assumed the management of the establishment concerned.”

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6. The said judgemnt has been followed by the Hon'ble Supreme Court in Assistant Provident Fund Commissioner, EPFO v. Management of RSL Textiles India Pvt. Ltd., through its Director reported in MANU/SC/0028/2017 : (2017) AIR (SCW) 679.

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7. A perusal of the orders of the authorities below and the learned Single Judge shows that the authorities below and the learned Single Judge have not applied their mind to the fact as to whether the reason as put forward by the appellant is sufficient to waive payment or not and what should be the proportionality in imposing the damages.

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8. In view of the fact that the authorities below have not applied their mind and in view of the fact that the Honourable Supreme Court has held that mens rea is an essential ingredient, the appeal is allowed and the impugned order of the learned Single Judge and the orders passed by the authorities below are set aside. The matter is remitted back to the Assistant Provident Fund Commissioner to once again consider the issue of mens rea before levying the damages and the said exercise may be completed within a period of twelve weeks from the date of receipt of a copy of this order. It goes without saying that the Assistant Provident Fund Commissioner will give reasonable opportunity to the appellant as well as the respondents. However, there shall be no order as to costs. Consequently, connected miscellaneous petitions are closed.”

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A perusal of the facts in the present case is identical to the facts as were placed before the First Bench of this Court in the decision supra. In such circumstances, this Court is of the considered view that an order, in identical terms, remitting the matter back to the concerned authority, requires to be passed in this case as well to decide on the question of mens rea.

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W.P.(MD)No.12418 of 2011

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In the aforesaid circumstances, following the ratio laid down in the decision supra, the orders passed by the authorities below are set aside and the writ petition is allowed by remitting the matter back to the second respondent to consider the issue of mens rea before levying the damages and pass appropriate orders after giving an opportunity of personal hearing to the concerned parties. The said exercise shall be completed within a period of six months from the date of receipt of a copy of this orders. No costs. Consequently, connected miscellaneous petition is closed.

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Sd/-

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ASSISTANT REGISTRAR(RTI Act)

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/TRUE COPY/

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/ /2021

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SUB ASSISTANT REGISTRAR(CS)

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The Presiding Officer, Employees Provident Fund Appellate Tribunal, Scope Minar, Core-II-4^th Floor, Lakshmi Nagar, New Delhi – 110 092.

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The Assistant Provident Fund Commissioner, Employees' Provident Fund Organisation, Sub Regional Office, No.18, Shree Complex, Madurai Road, Tiruchirappalli.

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Ogy (PA) MJ (CO) RP/11.05.2021/5P/3C.

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W.P.(MD)No.12418 of 2011 01.04.2021

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https://hcservices.ecourts.gov.in/hcservices/

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Trichirappalli Sarvodaya v. the Presiding Officer

Case brief

What is this about?

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Trichirappalli Sarvodaya v. the Presiding Officer

Case brief

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