Karnataka High Court
The Regional Provident Fund ... vs M/S Bombay Rayon Fashions Limited on 22 June, 2022
Bench: P.S.Dinesh Kumar, C.M. Poonacha
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 22ND DAY OF JUNE, 2022
PRESENT
THE HON'BLE MR. JUSTICE P.S.DINESH KUMAR
AND
THE HON'BLE MR. JUSTICE C.M. POONACHA
WRIT PETITION NO.5366 OF 2021 (L-PF)
BETWEEN:
THE REGIONAL PROVIDENT FUND COMMISSIONER-I
EMPLOYEES PROVIDENT FUND ORGANIZATION
REGIONAL OFFICE
NO.570, RAJARAJESHWARI REGENCY
26TH CROSS, IDEAL HOME CO-OP. SOCIETY
RAJARAJESHWARI NAGAR
BENGALURU-560 098.
...PETITIONER
(BY SMT. NANDITA D HALDIPUR, ADVOCATE)
AND:
M/S. BOMBAY RAYON FASHIONS LIMITED
(UNIT-17), NO.320/5, MYSORE ROAD
OPP: B.H.E.L, BENGALURU-560 026
KARNATAKA
BY MANAGING DIRECTOR.
...RESPONDENT
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO
QUASH THE ORDER DATED 27.02.2020 PASSED IN CASE
NO.EPF/ITB/157/2017 BY CENTRAL GOVERNMENT INDUSTRIAL
TRIBUNAL CUM LABOUR COURT AT ANNEXURE-F AND ETC,.
2
THIS WRIT PETITION COMING ON FOR PRELIMINARY
HEARING, THIS DAY POONACHA, J, MADE THE FOLLOWING:
ORDER
This Writ Petition is filed challenging the order dated
27.02.2022 passed in Case No.EPF/ITB/157/2017 by the
Central Government Industrial Tribunal-cum-Labour Court
(hereinafter referred to as the "Tribunal" for short).
2. The facts of the case in brief are as under:
The Respondent is engaged in the manufacture and
export of Readymade Garments. For its failure to pay PF
contribution for the period from July 2002 to October
2013, a summon dated 29.06.2015 notifying the date of
hearing as 10.07.2015 was issued to the Respondent. It is
not in dispute that the PF contribution for the period from
July 2002 to October 2013 has been belatedly remitted.
3. The Respondent, in response to the summons,
appeared before the Regional Provident Fund
Commissioner (hereinafter referred to as the
"Commissioner" for short) and filed its reply. The
Commissioner, vide order dated 10.07.2015, levied a sum
of Rs.7,68,576/- as penal damages under Section 14B of
the Employees' Provident Funds and Miscellaneous
Provisions Act, 1925, (hereinafter referred to as the "PF
Act" for short) and by another order dated 10.07.2015
levied a sum of Rs.5,35,992/- as interest under Section 7Q
of the PF Act.
4. The Respondent complied with the payment of
Rs.5,35,992/- levied towards interest. Being aggrieved by
the levy of damages of Rs.7,68,576/-, Respondent
preferred an appeal before the Tribunal in Case
No. EPF/ITB/157/2017. The PF Authority contested the
appeal before the Tribunal by filing reply.
5. The Tribunal, by its judgment dated
27.02.2020, has partially allowed the appeal filed by the
Respondent and reduced the quantum of damages levied
from Rs.7,68,576/- to Rs.6,14,900/-. Except the quantum
of damages, all other terms stipulated by the order
challenged, was not interfered with by the Tribunal.
6. Being aggrieved by the said order dated
27.2.2020 passed by the Tribunal, the present Writ
Petition is filed by the PF Commissioner.
7. The learned counsel for the Petitioner, in
support of the grounds raised in the Writ Petition, put forth
following contentions:
(a) that having regard to the admitted facts that
there was a delay in payment of PF contribution for the
period from July 2002 to October 2013, the Tribunal was
not justified in reducing the damages awarded;
(b) that the PF Authority, under Section 14B of the
PF Act, has taken into consideration the number of
defaults, period of delay, frequency of default and the
amount involved for the purpose of levying damages.
Having regard to the same, the Tribunal ought not to have
interfered with the quantum of damages awarded by the
PF Authority;
(c) that the plea that Respondent's financial
condition was poor, could not have been a basis for
reducing the liability of damages. The financial hardship is
not a justifiable ground for the Respondent to escape the
liability under Section 14B of the PF Act.
8. We have considered the contentions put forth
by the Counsel for the Petitioner in detail and perused the
material on record.
9. Having regard to the contentions put forth by
the counsel for the Petitioner, the point that arises for our
consideration is, "Whether the Tribunal was justified in
interfering with the quantum of damages levied on the
Respondent by the PF Authority"?
10. The Tribunal, while considering the case of the
Respondent, has appreciated the factual matrix of the
matter in detail. The Tribunal has also noticed the fact
that due to worldwide economic rescission and collapse of
major European and US Bankers/Financial Institutions as
also due to depreciation in the value of the Indian Rupee,
the Respondent suffered Forex loss (cash loss) in the year
2010-11 and 2011-12. That with great difficulty the
Respondent continued to function. The Respondent had
also approached the Corporate Debt Reconstructing Cell
(CDR) and vide letter dated 27.09.2013 the CDR has
approved the Reconstructing Scheme. Despite the
precarious financial position of the Respondent, the
Respondent has accepted the order passed under Section
7Q of the PF Act for payment of interest in a sum of
Rs.5,35,992/-.
11. The Tribunal, while considering the case of the
Respondent, has also noticed the fact that the mens
rea/intention to commit default as a requirement of law to
penalize an employer and has also noticed the judgment of
the Hon'ble Supreme Court in the case of Mcleod Russel
India Ltd., v. Regional Provident Fund Commissioner,
Jalpaiguri and others, reported in (2014) 15 SCC 263.
Further, the Tribunal has also noticed the settled
proposition of law laid down in the case of M/s Prestolite
of India Ltd., v. the Regional Director and Ors.,
reported in AIR 1994 SC 521, wherein it is noted that even
if the regulations have prescribed general guidelines and
the upper limits at which the imposition of damages can be
made, the Adjudicating Authority could take into account
the mitigating circumstances in finally deciding the matter
and that the PF Authority was not required to act
mechanically in applying the upper most limit of the table.
The Tribunal has also noticed that the PF Authority has not
accorded any reasons while imposing penalty.
12. The Tribunal, upon a re-appreciation of the
factual matrix and the settled legal proposition of law and
taking an over all view of the matter, instead of remanding
the matter, in the ends of justice, reduced the damages by
20%, thereby allowing the appeal of the Respondent in
part and reducing the damages from Rs.7,68,576/- to
Rs.6,14,900/-.
13. We are of the considered opinion that the
Tribunal, has taken into account all aspects of the matter
and after noticing the settled proposition of law, has rightly
applied the settled law to the factual matrix and passed
the order dated 27.02.2020.
14. In view of the facts recorded hereinabove, in
our considered view, this is not a fit case to exercise our
extraordinary discretionary jurisdiction under Article 226 of
the Constitution of India with the order dated 27.2.2020
passed by the Tribunal.
15. In the result, the Writ Petition stands
dismissed.
No costs.
Sd/-
JUDGE
Sd/-
JUDGE
nd
