Allowed

The Assistant Provident Fund v. the Presiding Officer

Madras HC1 Oct 2024WP(MD)/12972/2016

Case brief

AI extract

What is this about?

The Madras High Court allowed a writ petition by the Assistant Provident Fund Commissioner to set aside an EPF Appellate Tribunal order that reduced penalty damages to 5% of the levied amount. The Court held the Tribunal's finding of no willful default lacked merit as the respondent admitted the delay without substantiation.

What did the court decide?

The order of the Tribunal dated 24.09.2009 in ATA.No.529(13)2009 is set aside; the order dated 31.07.2009 imposing damages is revived.

The Assistant Provident Fund Vs the Presiding… — Pension and Retirement Benefits | Madras HC (2024)

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WP(MD)No.12972 of 2016

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BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT

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DATED : 01.10.2024

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CORAM:

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THE HONOURABLE MR.JUSTICE B.PUGALENDHI

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WP(MD)No.12972 of 2016 and

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WMP(MD)No.9770 of 2016

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Assistant Provident Fund Commissioner, Employees Provident Fund Organization, Sub Regional Office, P.B.No.588, Sree Complex, 'D' Block, No.18, Madurai Road, Tiruchirappalli.

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.. Petitioner

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1.The Presiding Officer, Employee's Provident Fund Appellate Tribunal, Scope Minor, Core II, 4^th Floor, Lakshmi Nagar District Centre, Lakshmi Nagar, New Delhi.

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2.M/s.Trichy Engineering College,

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1^st Floor, A-1 Salai Road, Woraiyur, Trichy – 3. Rep. Through its Finance Officer

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.. Respondents

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https://www.mhc.tn.gov.in/judis

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WP(MD)No.12972 of 2016

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PRAYER: Petition filed under Article 226 of the Constitution of India seeking issuance of a Writ of Certiorarified Mandamus calling for the records relating to the order passed by the first respondent in A.T.A.No. 529(13)2009, dated 24.09.2009, quash the same and consequently, directing the second respondent to pay the amount levied in Ref.No.SDC/TN/TRY/43230/Circle-13/Damages/2009 dated 31.07.2009, within a stipulated time limit.

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For Petitioner : Mr.I.Pinaygash For Respondents : Mr.K.Mu.Muthu for R.2 *****

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ORDER

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This writ petition is filed by the petitioner / Assistant Provident Fund Commissioner as against the order passed by the first respondent / Tribunal in ATA.No.529(13)2009, dated 24.09.2009, modifying the penalty imposed by the petitioner, vide proceedings dated 31.07.2009, u/s.14B of the Employees' Provident Fund and Misc. Provisions Act, 1952 [EPF Act].

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https://www.mhc.tn.gov.in/judis

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WP(MD)No.12972 of 2016

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2.The second respondent is an establishment covered under the EPF Act. With an allegation that the establishment has failed to pay the contribution as required u/s.6, 6A, 6C of the Act in time, the petitioner / original authority has initiated proceedings u/s.14B of the EPF Act, by issuing summons and imposed penal damages to the tune of Rs.8,29,343/u/s.14B and interest to the tune of Rs.2,97,761/- u/s.7Q of the EPF Act. This order was challenged by the second respondent / establishment before the first respondent / Tribunal and the Tribunal, by its order dated 24.09.2009, has modified the penal damages by restricting the damages to 5% of the actual amount levied by the petitioner. Aggrieved over the same, the present writ petition has been filed.

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3.Learned Standing Counsel for the petitioner / original authority

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submitted that the penal damages has been imposed as per the guidelines in Para 32A of the EPF Scheme. However, the Tribunal, without any reasons, has simply modified the order restricting to 5% of the damages, which was already imposed as per the scheme. He further submitted that the second respondent / establishment has not made out any case for 3/8

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https://www.mhc.tn.gov.in/judis

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WP(MD)No.12972 of 2016

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reducing the damages, however, the Tribunal has mechanically passed this order. Therefore, the impugned order is liable to be set aside.

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4.Learned Counsel for the second respondent made his submissions in line with the order passed by the Tribunal.

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5.This Court considered the submissions made by the petitioner's Counsel and perused the orders passed by the original authority and the appellate authority.

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6.The appellate authority has modified the damages to 5%, by holding that there was no mens rea , that the damages was imposed by the original authority without providing sufficient opportunity to the establishment and also in a mechanical manner by taking into account of the table as provided in Para 32A of the EPF Scheme.

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7.The question with regard to mens rea is no longer res integra ,

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inasmuch a Full Bench of this Court in Sun Pressing (P) Ltd and Others v. 4/8

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WP(MD)No.12972 of 2016

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Presiding Officer and Others [ 2024 (1) Writ L.R. 801 ] has held that mens rea or actus reus is not an essential requirement or sine quo non for levying penalty under Section 14B of the Act. Therefore, this finding of the Tribunal lacks merit. However, before levying damages in terms of Section 14B of the Act, the authority is required to follow the principles of natural justice and to consider all the mitigating circumstances projected by the employer / establishment. The Full Bench further held that there should be proper application of mind, objectively, on the merits of the case and in any event, the authority cannot resort to the arithmetical calculation or for levying damages as per Para 32A of the Scheme, without considering the mitigating circumstances.

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8.In the case on hand, the petitioner / original authority has initiated proceedings as against the second respondent / establishment, by issuing summons dated 26.06.2009 fixing the date of enquiry as 27.07.2009. On the said date, the Finance Officer of the second respondent has appeared and admitted the delay in remittance that it was because of the financial crisis faced by the second respondent. According to the second respondent, the 5/8

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https://www.mhc.tn.gov.in/judis

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WP(MD)No.12972 of 2016

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students intake coupled with the fee collection was drastically reduced and the salary and other administrative expenses were on the rise and therefore, there was a delay in remitting the dues. However, it was not substantiated by any materials. Therefore, the original authority has concluded the proceedings and imposed the penalty to an extent of Rs.8,29,343/- together with interest to an extent of Rs.2,97,761/-, by order dated 31.07.2009.

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9.The original authority has passed this order, only after considering the establishment's case. If there is any delay in remitting the dues, then the original authority is entitled to conduct enquiry and impose damages, as provided under Section 14B of the EPF Act and as per Para 32A of the EPF Scheme. However, without any valid ground, the appellate authority has came to a conclusion that there is no willful default by the second respondent / establishment in remitting the dues. When the second respondent himself has admitted the delay and has not offered any reasons for the delay, it is not known as to how the Tribunal has came to a conclusion that there is no willful default. Therefore, this finding of the Tribunal also lack merit.

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WP(MD)No.12972 of 2016

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10.For the foregoing reasons and discussions, this Court is inclined to interfere with the order passed by the Tribunal. Accordingly, the order passed by the first respondent / Tribunal in ATA.No.529(13)2009, dated 24.09.2009 is set aside and the order passed by the petitioner / original authority dated 31.07.2009 stands revived.

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In the result, this writ petition stands allowed. No costs. Consequently, connected miscellaneous petition is closed.

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Index : Yes / No 01.10.2024 NCC : Yes / No Internet : Yes gk

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https://www.mhc.tn.gov.in/judis

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WP(MD)No.12972 of 2016

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B.PUGALENDHI, J.