M/S. Samyuktha Karnataka vs Regional Provident Fund
2022 Latest Caselaw 2397 Kant

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        IN THE HIGH COURT OF KARNATAKA
                DHARWAD BENCH

 DATED THIS THE 15TH DAY OF FEBRUARY, 2022

                        BEFORE

       THE HON'BLE MR. JUSTICE R. NATARAJ


    WRIT PETITION NO.16284 OF 2011 (L-PF)

BETWEEN:

M/S. SAMYUKTA KARNATAKA,
BOX NO.30, KOPPIKAR ROAD,
HUBLI-580 020,
(MANAGED BY LOKA SHIKSHANA TRUST,
REPRESENTED BY ITS SECRETARY)
                                           ... PETITIONER
(BY SRI. G. I. GACHCHINAMATH, ADVOCATE)

AND:

REGIONAL PROVIDENT FUND
COMMISSIONER-II,
SUB-REGIONAL OFFICE,
4TH FLOOR, SRINATH COMPLEX,
NEW COTTON MARKET,
HUBBALLI - 580 029.
                                          ... RESPONDENT
(BY SRI. P. V. GUNJAL, ADVOCATE)


     THIS WRIT PETITION IS FILED UNDER ARTICLES 226 &
227 OF THE CONSTITUTION OF INDIA, PRAYING TO SET ASIDE
THE ORDER DATED 14.03.2011 PASSED BY THE EMPLOYEES
PROVIDENT FUND APPELLATE TRIBUNAL, NEW DELHI IN A.T.A.
NO.721(6) OF 2007, VIDE ANNEXURE-A.
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    THIS PETITION COMING ON FOR HEARING, THIS DAY, THE
COURT MADE THE FOLLOWING:

                           ORDER

The petitioner is established by Loka Shikshana Trust,

a Public Trust registered under the Bombay Public Trust Act,

1950. The petitioner was bound by the Working Journalists

and other News Paper Employees (Conditions of Service)

and Miscellaneous Provisions Act, 1955 (for short "the

Working Journalists Act") and the provisions of the

Employees' Provident Fund and Miscellaneous Provisions

Act, 1952 (for short "the Act, 1952"). The petitioner did not

pay contribution under the provisions of the Employees'

Provident Fund Scheme, 1952 (for short " the EPF Scheme,

1952") on the ground that the constitutional validity of the

amendment brought to paragraph 80 of the EPF Scheme,

1952 was seized before the Hon'ble Supreme Court and in

view of the uncertainity about the liability of newspaper

establishment in respect of the employees drawing salaries

exceeding limit. It is stated that the Constitutional validity

of paragraph 80 of the EPF Scheme, 1952 was upheld by

the Hon'ble Supreme Court in Express Publications

(Madurai) Ltd. Vs. Union of India reported in 2004

AIR SCW 1739. The respondent initiated proceedings

against petitioner under Section 7-A of the Act, 1952 and in

terms of the order dated 17.05.2006 determined the

amount payable by the petitioner at Rs.29,76,087/- along

with interest at 12% p.a. as prescribed under Section 7Q of

the Act from the date of liability till the date of remittance.

The petitioner paid the amount in two installments on

25.05.2006 and 30.05.2006. Thereafter, the respondent

issued a notice dated 18.05.2007, directing the petitioner to

show cause as to why damages as provided under Section

14-B of the Act, 1952 should not be recovered from the

petitioner for the delayed payment. Though the petitioner

replied indicating that the issue was pending consideration

before the Hon'ble Supreme Court, yet the respondent

refused to consider the request of the petitioner. The

respondent therefore passed an order imposing maximum

damages of Rs.24,71,427/- which included the following:

1. Damages under paragraph 32 of the 15,42,309 EPF Scheme, 1952

2. Administrative Charges for PF 1,08,264

3. Pension Contributions 8,19,873

Total 24,71,427

2. This was challenged by the petitioner before the

Employees Provident Fund Appellate Tribunal on various

grounds. The Tribunal in terms of the order dated

14.03.2011 rejected the appeal.

3. Being aggrieved by the aforesaid order, the

present writ petition is filed.

4. The learned counsel for the petitioner submitted

that the petitioner was under the bonafiade impression that

its employees were excluded from the provisions of the EPF

Scheme, 1952 and since the issue was pending

consideration before the Hon'ble Supreme Court, the

petitioner did not pay the contribution. He submitted that

similar establishments had not paid any contribution and

the respondent had not initiated any steps as provided

under law for well over nine years and therefore both the

petitioner and respondent were not sure about the

applicability of paragraph 80 of the EPF Scheme, 1952. He

further contended that the respondent had imposed

damages which far exceeded the maximum prescribed 37%

and therefore, the respondent as well as the Tribunal

Committed an error in not considering the contentions

urged.

5. Per contra, the learned counsel for the

respondent submitted that the petitioner was a fence sitter

as it did not challenge its liability to pay the contribution in

respect of its employees which was prescribed under

paragraph 80. He therefore submitted that the petitioner

ought to have paid the contribution to avoid the penal

consequences as provided under Section 14-B of the Act,

1952. He submitted that the petitioner took the risk to

await the orders of the Hon'ble Supreme Court and

therefore, it is bound to face the consequences to pay

damages as provided under the Act, 1952.

6. Insofar as the contention that the damages

claimed by the respondent exceeded the maximum

damages at 37% prescribed under the Act, 1952, the

learned counsel for the respondent was not able to justify

the claim of a sum of Rs.15,42,309/-. However, he claimed

that the damages cannot exceed the total amount of

contribution that the petitioner was therefore liable to pay

the amount demanded.

7. It is not in dispute that in view of the judgment

of the Hon'ble Supreme Court in Express Publications

(Madurai) Ltd.(Supra), the employees engaged in the

news paper industry are governed by the provisions

contended in paragraph 80 of the EPF Scheme, 1952. The

petitioner did not challenge its liability before any Court of

Law, but on the contrary, took advantage of the pending

proceeding before the Hon'ble Supreme Court where the

constitutional validity of paragraph 80 of the EPF Scheme,

1952 was questioned. The petitioner could have avoided

the penal consequences under the Act of 1952 by paying

the contribution as provided under paragraph 80 of the EPF

Scheme, 1952. If the petitioner has taken the risk of

awaiting the orders the Hon'ble Supreme Court, he is bound

to face the consequences.

8. In the case on hand, the petitioner had not made

any contribution in respect of employees for the period

1988 till the year 2005 which was aggregated to a sum of

Rs.29,76,087/-. It is seen that in addition to its

contribution, the petitioner was liable to pay administrative

charges for the provident fund, the pension contribution as

well as the administrative charges. However damages

imposed upon the petitioner exceeded the maximum limit

prescribed under paragraph 32(A) of the EPF Scheme,

1952. The ultimate calculation indicate the damages

claimed by the respondent amounted to 51% as against the

maximum 37% that could be claimed from the petitioner.

9. In that view of the matter, the imposition of the

damages at sum of Rs.15,43,309/- is exorbitant and beyond

the competence by the respondent. Therefore, the

following order is passed:

ORDER

The writ petition is partly allowed.

The impugned order passed by the respondent

demanding sum of Rs.15,43,309/- for the damages, is set

aside and the petitioner is directed to pay a sum of

Rs.11,01,152/-.

The other demands made by the respondent in the

form of administrative charges for E.D.L.I are not interfered

with.

Sd/-

JUDGE

SMM