Delhi High Court
M/S.Tops Security Ltd. vs Central Board Of Trustees (Cbt), ... on 12 February, 2018
$~3
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Judgment: 12.02.2018
+ W.P. (C) 8889/2015
M/S. TOPS SECURITY LTD. .... Petitioner
Through: Mr.Rajiv Shukla, Advocate with
Mr.Shubham Saxena, Ms.Shivani Kapoor
and Mr.Lakshay Mangla, Advocates.
versus
CENTRAL BOARD OF TRUSTEES (CBT), EPF & ANR.
..... Respondent
Through: Ms.Inderjeet Sidhu, Advocate with
Ms.Suchitra Chawla, Advocate.
CORAM:
HON'BLE MR. JUSTICE VINOD GOEL
VINOD GOEL, J. (ORAL)
1. The petitioner has invoked the writ jurisdiction of this court
under Article 226 & 227 of the Constitution of India for setting
aside the order dated 03.07.2015 passed by the Employees‟
Provident Fund Appellate Tribunal, New Delhi (in short
„Tribunal‟) in Appeal No. ATA-628(4)2015.
2. The facts giving rise to the writ petition, bereft of unnecessary
details, are that the petitioner company failed to remit the
Provident Fund and allied dues for the period from December,
1997 to August, 2014 within the stipulated time frame i.e.
within 15 days from the close of every month as required under
Para 38 of the Employees‟ Provident Fund Scheme, 1952 (in
brief „EPF scheme‟). A show cause notice dated 18.12.2014
under Section 14-B and 7-Q of the Employees‟ Provident Funds
and Miscellaneous Provisions Act, 1952 (in short „EPF Act‟)
was issued to the petitioner by the Employees‟ Provident Fund
Organization. Ultimately, by order dated 27.04.2015, Assistant
Provident Fund Commissioner, Delhi (South) in exercise of his
powers conferred under Section 14-B and 7-Q of the EPF Act
assessed the damages for the relevant period to the tune of
Rs.31,58,286/- and interest at a sum of Rs.20,62,601/- thus
amounting to total sum of Rs.52,20,887/-. The petitioner by
this order dated 27.04.2015 was directed to pay the amount
within 15 days.
3. The petitioner company preferred an appeal against the
aforesaid order dated 27.04.2015 issued by the Assistant
Provident Fund Commissioner before the Tribunal under
Section 7-I of the EPF Act.
4. Before the Tribunal it was argued by the petitioner that there is
no requirement of pre-deposit of any amount at the time of
filing the appeal. However, on behalf of the respondent, it was
argued that pre-deposit is mandatory at the time of filing of the
appeal under Section 7-O of the EPF Act. The Tribunal after
quoting section 7-O of the EPF Act held that a simple reading
of section 7-O of the EPF Act duly reveals that it is mandatory
for the appellant to deposit 75% of the assessed amount at the
time of filing an appeal, if order has been passed by the
Commissioner under Section 7-A of the EPF Act and
admittedly the appeal was against the order passed under
Section 14-B of the Act and not under Section 7-A of the Act.
The Tribunal also observed that the petitioner/appellant was
supposed to deposit the assessed amount under Section 7-Q of
the Act as the order under Section 7-Q is not appealable. The
Tribunal stayed the impugned order till further orders subject to
the petitioner/appellant depositing the amount assessed under
Section 7-Q of the Act with the concerned authority within 45
days, failing which the operation of the order shall be vacated
automatically.
5. Learned counsel for the petitioner argued that as the Tribunal
has wrongly held that order under Section 7-Q of the EPF Act is
not appealable, it had directed the appellant to deposit the
assessed amount under Section 7-Q of the EPF Act. He submits
that it is a composite order under Section 14-B read with
Section 7-Q of the EPF Act and is thus appealable.
6. On the other hand, learned counsel for the respondent argued
that the amount directed to be deposited by the petitioner was
not a "pre-deposit amount" for filing the appeal rather it is a
conditional order to deposit the amount for the purpose of
granting interim relief during subsistence of appeal.
7. At this juncture, it would be relevant to refer to Section 7-I of
the EPF Act, which reads as under: -
"7-I. Appeals to the Tribunal. - (1) Any person
aggrieved by a notification issued by the Central
Government, or an order passed by the Central
Government, or any authority, under the proviso to sub-
section 3, or sub-section 4, of section I, or section 3, or
sub-section 1 of section 7A, or section 7B except an
order rejecting an application for review referred to in
sub-section 5 thereof, or section 7C, or section 14B may
prefer an appeal to a Tribunal against such order.
(2) Every appeal under sub-section 1 shall be filed in
such form and manner, within such time and be
accompanied by such fees, as may be prescribed."
8. On a bare perusal of the aforesaid provision, it is evident that an
appeal to the Tribunal lies in respect of certain action on the
part of the Central Government or any Authority on certain
provisions of the Act. On a studied scrutiny, it is quite vivid
that though an appeal lies against recovery of damages under
Section 14-B of the EPF Act, no appeal is provided for against
imposition of interest as stipulated under Section 7-Q of the
EPF Act. It is seemly to note here that Section 14-B of the EPF
Act has been enacted to penalise the defaulting employers as
also to provide reparation for the amount of loss suffered by the
employees. It is not only a warning to the employers in general
forbidding them from committing a breach of the statutory
requirements but also at the same time meant to provide
compensation or redress to the beneficiaries i.e. to recompense
the employees for the loss sustained by them. The entire
amount of the damages assessed and awarded under Section
14B of the EPF Act except for the amount relating to
administrative charges is required to be transferred to the
Employees‟ Provident Fund.
9. Here it would also be profitable to refer to Section 7-Q of the
EPF Act, which reads as follows: -
"7-Q. The employer shall be liable to pay simple interest
at the rate of twelve per cent per annum or at such higher
rate as may be specified in the Scheme on any amount
due from him under this Act from the date on which the
amount has become so due till the date of its actual
payment:
Provided that higher rate of interest specified in the
Scheme shall not exceed the lending rate of interest
charged by any scheduled bank."
10. Under this provision the employer can be burdened with simple
interest @ 12% per annum or at the rate as may be specified in
EPF Scheme on any amount due on him from the date of which
the amount has become so due till the date of its actual
payment.
11. To deal with the rival contentions of the parties, it is also
relevant to refer to Section 7-O of the EPF Act, which provides
as under: -
"7-O. Deposit of amount due, on filing appeal. - No
appeal by the employer shall be entertained by a
Tribunal unless he has deposited with it seventy-five per
cent of the amount due from him as determined by an
officer referred to in section 7A:
Provided that the Tribunal may, for reasons to be
recorded in writing, waive or reduce the amount to be
deposited under this section."
12. It is as clear as crystal from a bare reading of section 7-O of the
EPF Act that whenever an order has been passed under Section
7-A of the EPF Act, the appeal filed by an employer shall not be
entertained by the Tribunal unless the employer deposits with it
75% of the assessed amount under Section 7-A of the EPF Act.
However, the Tribunal may for the reasons to be recorded in
writing waive or reduce the amount to be deposited under this
section. Admittedly, the order impugned before the Tribunal
was not under Section 7-A of the EPF Act but a composite
order under Section 14-B and 7-Q of the EPF Act, therefore, the
petitioner was not entitled to pre-deposit any amount as
assessed under Section 14-B and 7-Q of the EPF Act.
13. In fact, this question has been considered by the Hon'ble
Supreme Court in the case of Arcot Textile Mills Limited Vs.
Regional Provident Fund Commissioner and Others, (2013)
16 SCC 1, wherein it was held that when a composite order
under Section 7-A and 7-Q is passed together, such an order
shall be appealable under Section 7-I of the EPF Act. It was
further observed by the Apex Court that if for some reason the
authority chooses to pass an independent order under Section 7-
Q, the same is not appealable.
14. The impugned order dated 27.04.2015 before the Tribunal was
also a composite order passed under Section 14-B and 7-Q of
the EPF Act and therefore in view of the judgment of the Apex
Court in the aforementioned case of Arcot Textile Mills
Limited (supra), such order impugned before the Tribunal was
appealable.
15. Regarding the power of Tribunal to grant interim relief during
subsistence of appeal subject to certain conditions, the learned
counsel for the respondent has relied upon Para No. 15 & 19 of
a judgment of the Division Bench of this court in Jai Balaji
Security Services (Regd.) Vs. A.P.F.C. Delhi (North) in LPA
No. 880/2015 decided on 16.12.2015, which read as under: -
"15. But that would not mean that if an aggrieved
person, who has challenged an order under Section 7-
Q and/or Section 14-B of the Act moves an
application before the Appellate Tribunal seeking
stay of the demand raised, the Appellate Tribunal
would not be empowered to pass a conditional order
of stay. Whereas Section 7-I of the Act creates the
forum of appeal, Section 7-O puts an embargo on the
entertainment of the appeal by the Appellate Tribunal by
requiring 75% of the amount due as determined under
Section 7-A to be deposited; with a power vested in the
Appellate Tribunal to waive or reduce the amount to be
deposited. Thus, whereas an appeal has to be entertained
without insisting on any pre-deposit concerning orders
passed under Section 7-Q and Section 14-B of the Act,
but the pendency of the appeal would not prohibit
the Competent Authority to effect the recovery unless
the Appellate Tribunal passes an interim order
concerning the demand. This would simply mean that
the Appellate Tribunal can pass conditional orders."
"19. We reiterate once again. Section 7-O of the Act
would apply only to orders passed under Section 7-A of
the Act and condition of pre-deposit of 75% of the
amount assessed would be a condition for entertaining
the appeal by the Appellate Tribunal subject to the
Tribunal passing an order under the Proviso to the said
Section. The said order is distinct from an order
passed by the Appellate Tribunal in an application
seeking interim directions where demands raised
under Section 7-Q and Section 14-B of the Act are
challenged. Said orders are not passed in exercise of
the power under the Proviso to Section 7-O of the
Act."
16. It is conveyed from the above said judgment of the Division
Bench of this court that the Tribunal would be empowered to
pass a conditional order of stay during the pendency of appeal
where the demand raised under Section 14-B and 7-Q of the
EPF Act has been challenged. Mere pendency of appeal would
not prohibit the EPF Authority to effect recovery unless
Tribunal stays the recovery by interim order during subsistence
of appeal subject to certain conditions.
17. While considering the facts of the present case in the light of the
aforesaid legal position, it is found that by impugned order the
Tribunal has not directed the petitioner to deposit the amount
assessed under Section 7-Q of the EPF Act with the concerned
authorities within 45 days as a pre-deposit. However, from a
close scrutiny of the impugned order of the Tribunal, it is found
that the Tribunal has directed the petitioner to deposit the entire
amount as assessed under Section 7-Q of the EPF Act under a
wrong impression that the order under Section 7-Q of the EPF
Act is not appealable.
18. In view of the judgment of the Apex Court in Arcot Textile
Mills Limited (supra), at the cost of repetition, the order dated
27.04.2015 impugned before the Tribunal was a composite one
falling under Section 14-B and 7-Q of the EPF Act and thus
appealable. However, in view of the judgment of the Division
Bench of this court while considering the legal position so
discussed, during the pendency of the appeal the competent
authority would not be prohibited to effect the recovery of the
assessed damages and interest unless the Tribunal passes an
interim order concerning the demand subject to certain
condition including deposit of assessed amount or part thereof.
19. The Tribunal has passed the order under a wrong impression on
the legal position that the order under Section 7-Q of the EPF
Act is not appealable in contrast to the judgment of the Apex
Court in Arcot Textile Mills Limited (supra). Since the
Tribunal has directed the petitioner to deposit the amount of
interest as assessed under Section 7-Q of the EPF Act under the
wrong impression as mentioned above, the impugned order
dated 03.07.2015 of the Tribunal is hereby set-aside with the
direction that the Tribunal shall decide the request for granting
interim relief afresh on such terms and conditions as it may
deem fit in the facts and circumstances of the case during the
pendency of the appeal.
20. The petition is disposed of accordingly.
(VINOD GOEL)
JUDGE
FEBRUARY 12, 2018
"shailendra"
