[Cites 6, Cited by 0]
Karnataka High Court
The Regional Provident Fund ... vs M/S Canbank Financial Services Ltd on 27 January, 2026
-1-
NC: 2026:KHC:4434-DB
WP No. 6617 of 2023
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 27TH DAY OF JANUARY, 2026
PRESENT
THE HON'BLE MR. JUSTICE D K SINGH
AND
THE HON'BLE MR. JUSTICE S RACHAIAH
WRIT PETITION NO. 6617 OF 2023 (L-PF)
BETWEEN:
1. THE REGIONAL PROVIDENT
FUND COMMISSIONER
BHAVISHYANIDHI BHAVAN,
NO.13,
RAJA RAM MOHAN ROY ROAD,
BENGALURU - 560 025.
Digitally ...PETITIONER
signed by
SREEDHARAN (BY SRI. SHWETHA ANAND, ADVOCATE)
BANGALORE
SUSHMA
LAKSHMI
Location: High
Court of AND:
Karnataka
1. M/S CANBANK FINANCIAL SERVICES LTD.,
SRI UDAY SHANBHAG,
REPRESENTED BY
GROUP EXECUTIVE,
NO.14,
NAVEEN COMPLEX,
-2-
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WP No. 6617 of 2023
HC-KAR
6TH FLOOR,
M.G.ROAD,
BANGALORE - 560 001.
...RESPONDENT
(BY SRI. K VIJENDRA, ADVOCATE)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE
A WRIT IN THE NATURE OF CERTIORARI OR ANY OTHER
APPROPRIATE WRIT QUASHING THE PORTION OF THE
IMPUGNED ORDER OF THE HON'BLE CENTRAL GOVERNMENT
INDUSTRIAL TRIBUNAL-CUM-LABOUR COURT DATED 7TH
DECEMBER 2020 PASSED IN APPEAL No. 543/2017 THEREBY
MODIFYING THE ORDER DATED 12.12.2002 ON THE FILE No.
KN/PF/RO/BNG/PD/1410/13181/02-03 AS PER ANNEXURE-A
AND ETC.,
THIS PETITION, COMING ON FOR PRELIMINARY
HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE D K SINGH
and
HON'BLE MR. JUSTICE S RACHAIAH
-3-
NC: 2026:KHC:4434-DB
WP No. 6617 of 2023
HC-KAR
ORAL ORDER
(PER: HON'BLE MR. JUSTICE D K SINGH)
1. Heard Smt.Swetha Anand, learned counsel for the
petitioner/ Regional Provident Fund Commissioner and
Sri.K.Vijendra for the respondent company.
2. The present petition has been filed by the Regional
Provident Fund Commissioner (hereinafter referred as
'RPFC') impugning the order dated 07.12.2020 passed by
the Central Government Industrial Tribunal-Cum-Labour
Court, Bengaluru (hereinafter referred as 'CGIT') in EPF
No.543/2017, whereby the CGIT has modified the order
dated 12.12.2002 passed by the RPFC levying damages
for the delayed payment of EPF contribution and non-
compliance of Section 14-B of the Employees' Provident
Funds and Miscellaneous Provisions Act, 1952 (hereinafter
referred as 'EPF Act') for the period of July, 1990 to
August, 1997, thereby reducing the same by 50% and
directing the respondent to deposit Rs.9,83,500/- as
against Rs.19,66,985/-, the quantum of amount of the
damages assessed by the RPFC.
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3. The RPFC, Bengaluru by the order dated 12.12.2002
imposed the penalty of damages of Rs.19,66,985/- under
Section 14-B of the EPF Act on delayed payment of
provident fund contribution for the period June, 1997 to
July, 1997 on the respondent company.
4. The damages in the nature of penalty were levied after a
lapse of 5 years, the matter was sub-judice till
04.07.1997. Thereafter, the respondent company was
permitted to seek exemption, consequent upon which the
respondent filed an application seeking exemption, which
was refused. On its refusal, promptly the respondent had
paid the PF contribution and interest of Rs.19,90,000/-
within the stipulated time.
5. The levy of damages was contested by filing an appeal
before the CGIT. The learned Tribunal, after considering
the provisions of Section 14-B of the EPF Act, noted that
the matter was sub-judice for a long time between
16.09.1993 to 01.04.1997 and thereafter until the prayer
of the respondent company to exempt the establishment
under Section 17 of the EPF Act was considered by the
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RPFC by the order dated 02.09.1997. The CGIT, relying
on the judgment of the Hon'ble Supreme Court in the
case of Mcleod Russel India Ltd. v. Regional
Provident Fund Commissioner, Jalpaiguri and
others1 held that there should be mens rea for avoiding
payment of the EPF contribution. In the present case, as
soon as the application for exemption was refused, the
respondent had deposited the EPF contribution. It was
also held that there was nothing to disclose that how the
damages have been calculated to be Rs.19,19,000/-.
6. The CGIT also took note of para-32A of the EPF scheme,
which prescribes the rates of damages on the percentage
of arrears of EPF contributions. For delay of less than 2
months it is 5%, for 2 months to 4 months it is 10%, for
4 months upto 6 months it is 15%, for 6 months and
above it is 25%. The Tribunal held that the word 'may'
appearing in Section 14-B would disclose that the penalty
in damages is not mandatory but discretionary,
depending on the facts and circumstances of the case.
(2014) 15 SCC 263
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The Commissioner has discretion either to reduce or to
waive the damages. Thus, the Tribunal exercising its
jurisdiction under Section 7-L of the EPF Act reduced the
damages by 50%, which would come to Rs.9,83,492.50/.
7. Smt. Swetha Anand, learned counsel for the petitioner/
Provident Fund Commissioner has vehemently submitted
that, Section 14-B prescribes that the damages not
exceeding the amount of arrears may be recovered, as
may be specified in the scheme. Once the rates have
been specified in the scheme for recovery of the
damages, the Commissioner or the CGIT will not have the
power to reduce the said damages as same have been
statutorily notified in the scheme.
8. We find some substance in the submission advanced by
learned counsel for the Provident Fund Commissioner that
the penalty cannot be reduced than prescribed under the
scheme. The scheme prescribes a maximum penalty of
25% for the delayed contribution of the EPF fund by an
employer. Here, the amount of arrears which was
belatedly deposited by the employer/respondent was
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Rs.50,62,000/-. Therefore, the maximum penalty could
have been 25% of the same, which would come around
Rs.12,65,500/-. Therefore, there is no justification for
imposing the penalty of Rs.19,66,985/-. Thus, the
respondent is entitled for refund of the excess amount
levied as penalty and we direct the petitioner to refund
the excess amount collected from the respondent within
the period of four weeks with interest at 12% from the
date of deposit till date of refund.
With the aforesaid observation, the writ petition stands
disposed of.
Sd/-
(D K SINGH)
JUDGE
Sd/-
(S RACHAIAH)
JUDGE
UN
List No.: 1 Sl No.: 27
