The Handmaids Of Sacred Heart Of ... vs Employees Provident Funds ...
2021 Latest Caselaw 9646 Ker

                IN THE HIGH COURT OF KERALA AT ERNAKULAM

                                   PRESENT

          THE HONOURABLE MR.JUSTICE MURALI PURUSHOTHAMAN

     TUESDAY, THE 23RD DAY OF MARCH 2021 / 2ND CHAITHRA, 1943

                       WP(C).No.23581 OF 2015(W)


PETITIONER/S:

                THE HANDMAIDS OF SACRED HEART OF JESUS SOCIETY
                CHEMBUMUKKU, KAKKANAD, KOCHI-682 030,
                REPRESENTED BY ITS CHAIRPERSON SR.PEARLY
                CHETTIVEETIL.

                BY ADVS.
                SRI.C.ANIL KUMAR
                SMT.A.K.PREETHA

RESPONDENT/S:

      1         EMPLOYEES PROVIDENT FUNDS ORGANISATION
                REPRESENTED BY THE REGIONAL PROVIDENT FUND
                COMMISSIONER, EMPLOYEES' PROVIDENT FUNDS
                ORGANISATION, SUB REGIONAL OFFICE,
                BHAVISHYANIDHI BHAVAN, KALOOR, COCHIN-682 017.

      2         ASSISTANT PROVIDENT FUND COMMISSIONER
                EMPLOYEES' PROVIDENT FUNDS ORGANISATION SUB REGIONAL
                OFFICE, BHAVISHYANIDHI BHAVAN, KALOOR,
                COCHIN-682 017.

      3         ASSISTANT PROVIDENT FUND COMMISSIONER (RECOVERY)
                EMPLOYEES' PROVIDENT FUNDS ORGANISATION SUB REGIONAL
                OFFICE, BHAVISHYANIDHI BHAVAN,
                KALOOR, COCHIN-682 017.

                R1 BY ADV. DR.S.GOPAKUMARAN NAIR (SR.)
                R1 BY ADV. SRI.A.RAJASIMHAN
                R1 BY SRI.S.PRASANTH, SC, EMPLOYEES PROVIDENT FUND
                ORGANISATION

     THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 16-03-
2021, THE COURT ON 23-03-2021 DELIVERED THE FOLLOWING:
 WP(C).No.23581 OF 2015(W)     ..2..




                            JUDGMENT

Dated this the 23rd day of March 2021

The petitioner, a charitable Society registered

under the provisions of the Travancore-Cochin

Literary, Scientific and Charitable Societies

Registration Act, 1955, is running a special school by

name 'Snehanilayam' for differently abled children.

The school was started in the year 1977 and the staff

were paid only honorarium for their service and to

secure them some benefits under the social security

schemes, in the year 2013, the petitioner approached

the Employees Provident Funds Origanisation for

covering the school under the provisions of the

Employees' Provident Fund Scheme, 1952.

2. The Assistant Provident Fund Commissioner,

the 2nd respondent issued Exhibit -P1 proceedings WP(C).No.23581 OF 2015(W) ..1..

dated 23.08.2013 making the provisions of the

Employees' Provident Funds and Miscellaneous

Provisions Act, 1952 (hereinafter referred to as the

'Act' for short) along with the schemes framed

thereunder applicable to the school with effect from

05.06.2003 under the category "Educational

Institution". The petitioner was directed to remit the

arrears of contributions for the period from June,

2003 to July, 2013.

3. The petitioner then requested the Assistant

Provident Fund Commissioner to waive off the

employees contribution for the period prior to

01.10.2013 as no contribution could be collected

from the employees in the case of retrospective

coverage and due to the financial difficulties the

special school is facing. Later, the 2nd respondent by

Exhibit -P4 allowed waiver of employees share for

the pre-discovery period from June 2003 to February WP(C).No.23581 OF 2015(W) ..1..

2013. Accordingly, the petitioner remitted an amount

of Rs.9,91,165/- towards contribution for the period

from 05.06.2003 to 24.12.2013 evidenced by Exts.

P5(a) to P5(i) series challans.

4. While so, the 2nd respondent issued Ext. P6

notice of hearing under the 1 st proviso to Section 14-

B and for payment of interest under Section 7-Q of

the Act for belated remittance made during the

period from 05.04.2003 to 24.12.2013. An amount of

Rs.8,66,663/- was demanded as damages and a sum

of Rs.6,25,402/- was demanded as interest. Pursuant

to Ext. P6, Ext. P8 proceedings under Section 14-B

was issued by the 2nd respondent, levying a sum of

Rs.8,66,663/- as damages for belated remittance of

contribution. Further, Ext. P9 proceedings making

the petitioner liable for interest under Section 7-Q

of the Act was also passed by the 2nd respondent. The

petitioner remitted the entire interest levied under WP(C).No.23581 OF 2015(W) ..1..

Section 7-Q as evidenced by Ext. P7 (a) to P7(i)

documents. According to the petitioner, they tried to

appraise the 2nd respondent that they are not liable

to pay damages and expected a favourable decision

and therefore did not prefer any appeal against Ext.

P8 with in the stipulated period. However, the

petitioner was served with Ext. P10 notice of demand

to defaulter by the 3rd respondent Recovery Officer

demanding payment of a sum of Rs. 11,55,350/-

towards damages and interest under Section 7-Q.

Challenging Exts.P8 and P10, the petitioner has

approached this Court.

5. According to the petitioner, the petitioner

had not collected the employees share for the pre-

discovery period and while issuing Ext. P10 notice of

demand, the remittance already made towards

interest levied under Section 7-Q vide Ext. P7 series

challans were not taken into account and that Ext.

WP(C).No.23581 OF 2015(W) ..1..

P8 order issued under Section 14-B is vitiated by

non-application of mind. The petitioner also

contends that the mitigating circumstances and

other relevant factors in deciding the question of

damages under Section 14-B were not considered by

the 2nd respondent while issuing Ext. P8.

6. A Statement has been filed on behalf of the

respondents wherein it is stated that Ext. P8 order

was passed after hearing the petitioner and with due

application of mind and in conformity with the

statutory provisions and that the petitioner has not

availed of the statutory remedy available under

Section 7(i) of the Act.

7. Heard Smt. A.K Preetha, the learned Counsel

for the petitioner and Sri. S. Prasanth, the learned

Standing Counsel for the respondents.

WP(C).No.23581 OF 2015(W) ..1..

8. According to the petitioner, Ext. P8 is vitiated

by non application of mind. Smt. Preetha, the learned

counsel for the petitioner submits that it appears

from Ext. P8 that the 2nd respondent has issued the

said order after making modifications in some other

order passed by him which was retained in the

computer system. The counsel invited this Court's

attention to one paragraph in Ext. P8 which reads as

follows:-

"Moreover, there is ample proof that even the employees share of contribution deducted from the salary of the workers were not remitted promptly by the employer, which confirms that the employer had utilized the amount for personal use or for the development of the business." (emphasis supplied)

9. The fact that the remittance of employees

share for the pre-discovery period was waived by Ext.

P4 was omitted to be taken note of by the 2 nd WP(C).No.23581 OF 2015(W) ..2..

respondent while passing Ext. P8. Further, the

establishment is a special school for differently abled

children. I find substance in the argument of the

counsel for the petitioner that the finding of the 2 nd

respondent in Ext.P8 that the employer had utilized

the employees' share of contribution deducted from

the salary of the workers for personal use or for the

development of the business vitiates Ext.P8 on

ground of non-application of mind. Though the order

says there is ample proof for the default, the order

does not speak of any such proof. The 2 nd respondent

in Ext. P8 recites that he has applied his mind to all

relevant factors and reminds himself of the Apex

Court's direction to pass reasoned order after due

application of mind. However, the order shows that

there is no application of mind while passing the

order under Section 14-B imposing damages. It does

not disclose consideration of any relevant factors for WP(C).No.23581 OF 2015(W) ..3..

levying the damages under Section 14-B. Further, on

going through Ext.P8, this Court also feels that the

2nd respondent has issued the said order after making

modifications in some other order passed by him

which was retained in the computer. The counsel also

referred to the decision in Standard Furniture,

Calicut v. Registrar, EPF Appellate Tribunal and

others 2020 (3) KHC 793 wherein a Division

Bench of this Court cautioned the authorities

exercising powers under Section 14-B of the Act from

passing orders using standard printed forms

especially when they exercise quasi-judicial functions.

The Court held that various factors have to be

adjudicated before levying penalty under Section 14-

B and therefore printed forms are unsuited for the

purpose. The Court also directed the Employees

Provident Funds Authorities to ensure that the

practice of using printed standard forms to issue WP(C).No.23581 OF 2015(W) ..4..

orders under Section 14-B of the Act is stopped

forthwith.

10. Very recently, the Apex Court, in Union

Public Service Commission v. Bibhu Prasad

Sarangi and others (2021 SCC Online SC 187)

deprecated the use of 'cut-copy-paste' in Judgments

and held that a prolific use of the 'cut-copy-paste'

function should not become a substitute for

substantive reasoning which constitute the soul of a

judicial decision.

11. It is trite that levy of damages under Section

14-B is not automatic. All circumstances which led to

the delay in remitting the Provident Fund

contribution, mitigating circumstances, existence of

mens rea or actus reus to contravene a statutory

provision etc have to be considered by the authorities

before levying damages under Section 14-B. Such WP(C).No.23581 OF 2015(W) ..5..

adjudication cannot be done in a cyclostyled form or

manner. A perusal of Ext. P8 shows that it is a cut-

copy-paste in an existing item retained in the

computer. The recital in the order 'I have applied my

mind' without actual application of mind to the facts

of the case and the relevant materials, will not make

the order a reasoned order as required in law. Ext.P8

order cannot be sustained. Further, the remittance

already made under Section 7-Q cannot be demanded

in Ext.P10 notice of demand. I set aside Ext.P8 order

levying damages under Section 14-B and Ext.P10

notice of demand to defaulter and direct the 2 nd

respondent to pass fresh orders after hearing the

petitioner. Since the matter is pending before this

Court for more than 5 years and since this Court

finds that Ext. P8 order is vitiated by non-application

of mind, the petitioner need not be relegated to avail

the statutory remedy of filing appeal under Section WP(C).No.23581 OF 2015(W) ..6..

7(i) of the Act. The amount remitted by the petitioner

as condition for interim order in the writ petition will

remain with the respondents till fresh orders are

passed as above and will be adjusted against the final

demand.

The writ petition is disposed of, as above.

Sd/-

                                     MURALI
                                 PURUSHOTHAMAN
    SB                               JUDGE
 WP(C).No.23581 OF 2015(W)        ..7..



                               APPENDIX
    PETITIONER'S/S EXHIBITS:

 EXHIBIT P1 TRUE        COPY       OF       THE     ORDER
            NO.KR/KC/29315/ENF.I(6)/2013/6980       DATED

23.8.2013 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER.

EXHIBIT P2 A TRUE COPY OF THE LETTER DATED 1.10.2013 ALONG WITH DECLARATION FROM THE STAFF, SUBMITTED BY THE PETITIONER TO THE 2ND RESPONDENT.

EXHIBIT P3 TRUE COPY OF THE LETTER DATED 28.4.2014 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER.

EXHIBIT P4 TRUE COPY OF THE LETTER DATED 10.7.2014 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER.

EXHIBIT TRUE COPY OF CHALLAN SHOWING REMITTANCE OF EPF P5(A) TOCONTRIBUTION(9 NOS.).

P5(I)

EXHIBIT P6 TRUE COPY OF THE NOTICE DATED 1.1.2014 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER.

EXHIBIT TRUE COPY OF CHALLAN SHOWING REMITTANCE OF P7(A) TOINTEREST ON CONTRIBUTION(9 NOS.). P7(I)

EXHIBIT P8 TRUE COPY OF ORDER DATED 26.5.2014 PASSED BY THE 2ND RESPONDENT IMPOSING DEMAGES ON THE PETITIONER.

EXHIBIT P9 TRUE COPY OF ORDER DATED 30.4.2015 PASSED BY THE 2ND RESPONDENT UNDER SECTION 7Q OF THE EPF & MP ACT.

EXHIBIT TRUE COPY OF THE RECOVERY NOTICE DATED P10 19.6.2015 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER.

//TRUE COPY //

P.A TO JUDGE