Central Board Of Trustees vs Bake N Joy Hot Bakery
2024 Latest Caselaw 266 Ker

Kerala High Court

Central Board Of Trustees vs Bake N Joy Hot Bakery on 4 January, 2024

Author: P Gopinath

Bench: P Gopinath

                IN THE HIGH COURT OF KERALA AT ERNAKULAM
                                  PRESENT
                 THE HONOURABLE MR. JUSTICE GOPINATH P.
     THURSDAY, THE 4TH DAY OF JANUARY 2024 / 14TH POUSHA, 1945
                        WP(C) NO. 35163 OF 2019
PETITIONER:

              CENTRAL BOARD OF TRUSTEES,
              EMPLOYEES PROVIDENT FUND,
              THROUGH REGIONAL PROVIDENT FUND COMMISSIONER,
              REGIONAL OFFICE, V.K.COMPLEX, FORT ROAD, KANNUR.
              BY ADV K.C.SANTHOSHKUMAR

RESPONDENTS:

    1         BAKE 'N' JOY HOT BAKERY,
              RAILWAY STATION ROAD, KANNUR-670 001.

    2         CENTRAL GOVERNMENT INDUSTRIAL TRIBUNAL
              CUM LABOUR COURT, KARITHALA - KARSHAKA ROAD,
              ERNAKULAM - 682 011.
              BY ADVS.

              ATHUL BABU
              PRANOY K.KOTTARAM
              SIVARAMAN P.L


     THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
04.01.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
 WP(C) NO. 35163 OF 2019
                                      2


                                                                       C.R.

                               JUDGMENT

The Central Board of Trustees of the Employees Provident

Fund has filed this writ petition through the Regional Provident

Fund Commissioner, Regional Office, V.K.Complex, Fort Road,

Kannur, challenging Ext.P3 order of the Central Government

Industrial Tribunal-Cum-Labour Court (in short 'the Tribunal'),

Ernakulam in Appeal No.117 of 2019, which was an appeal filed by

the 1st respondent challenging levy of damages under Section 14 (B)

of the Employees' Provident Funds and Miscellaneous Provisions

Act, 1952 (in short 'the EPF Act'). Through Ext.P3 order, the

Tribunal has reduced the amount of damages to 50% of the amount

levied for reasons stated in the order.

2. The learned counsel appearing for the petitioner would

submit that the levy of damages under Section 14 (B) of the EPF Act

is statutory. It is submitted that this is a case where there was a clear

disregard to the obligation under law to pay the contributions in

respect of the employees in question. It is submitted that the

contributions had been collected from the employees and had to be

remitted to the Department together with the employer's WP(C) NO. 35163 OF 2019

contribution. It is submitted that after collecting/deducting the

employee part of the contribution, the 1 st respondent had failed to

remit the amount to the Department and therefore, the levy of

damages was perfectly justified and in tune with the statutory

provisions. It is submitted that the Tribunal had without just cause

interfered with the order levying damages and had reduced the

damages to 50% of the amount levied.

3. The learned counsel appearing for the 1st respondent

would submit that there is no illegality in Ext.P3 order of the

Tribunal. It is submitted that the reasons which made with the

Tribunal in granting relief to the 1st respondent is evident from the

order itself. It is submitted that the Tribunal had clearly found that

this was a case where the coverage and liability under the EPF Act

had been disputed by the organization. It is submitted that it was

also found that the business was being run by the husband of the

present proprietor, who had passed away in 2004 after suffering

from a certain illness, for which he had to take treatment in Bombay.

It is submitted that the Tribunal has found that the proceedings in

which the coverage of the establishment was determined were not

properly prosecuted by the late husband of the petitioner on account

of his illness and that an appeal filed against those proceedings was WP(C) NO. 35163 OF 2019

also dismissed for non-prosecution. It is submitted that it is clear

from the judgment of the Supreme Court in Employees' State

Insurance Corporation v. HMT Ltd and Another; (2008)3 SCC 35 as

also from the judgment of the Supreme Court in Mcleod Russel

India Limited v. Regional Provident Fund Commissioner, Jalpaiguri

and Others; (2014)15 SCC 263 that unless there is mens rea or actus

reus and a conscious and willful disregard of obligations under the

EPF Act, there could not be an automatic imposition of damages at

100%. It is submitted that in the facts and circumstances of the case,

the order of the Tribunal in Appeal No.117 of 2019 reducing the

damage to 50% cannot be said to be unreasonable warranting the

interference at the hands of this Court in the exercise of the

jurisdiction vested in this Court under Article 226 of the

Constitution of India.

4. Having heard the learned counsel appearing for the

petitioner and the learned counsel appearing for the 1 st respondent, I

am of the view that there is considerable merit in the contention

taken by the learned counsel appearing for the 1 st respondent. The

facts which compelled the Tribunal to take a view that this was not a

case where the damages had to be levied at 100% is spelt out in the

order itself. These reasons have already been noticed by this Court WP(C) NO. 35163 OF 2019

while considering the submissions of the learned counsel appearing

for the 1st respondent. Indeed, the requirement of mens rea and/or

actus reus is no longer a necessary ingredient to be proved to

impose damages. In Horticulture Experiment Station v. Provident

Fund Organization, (2022) 4 SCC 516 after referring to HMT

(supra), McLeod Russel (India) Ltd. (supra), Provident Fund

Commr. v. RSL Textiles (India) (P) Ltd. (2017) 3 SCC 110, SEBI v.

Shriram Mutual Fund, (2006) 5 SCC 361 & Union of India v.

Dharamendra Textile Processors, (2008) 13 SCC 369 it was held:-

"15. Taking note of the exposition of law on the subject, it is well- settled that mens rea or actus reus is not an essential element for imposing penalty or damages for breach of civil obligations and liabilities."

It is no doubt true that in Horticulture Experiment Station (supra),

while dealing with the question of damages under the EPF Act, the

Supreme Court followed the view in SEBI v. Shriram Mutual Fund

(which was decided in the background of penalty provisions in the

SEBI Act) that "a breach of civil obligation which attracts penalty in

the nature of fine under the provisions of the Act and the

Regulations would immediately attract the levy of penalty

irrespective of the fact whether contravention must be made by the

defaulter with guilty intention or not. We also further held that WP(C) NO. 35163 OF 2019

unless the language of the statute indicates the need to establish the

presence of mens rea, it is wholly unnecessary to ascertain whether

such a violation was intentional or not." The above view in respect

of penalty provisions in the SEBI Act, in Shriram Mutual Fund

(supra) was followed by a three-judge bench of the Supreme Court in

Union of India v. Dharamendra Textile Processors (supra) (which

was decided in the background of penalty provisions in the Income

Tax Act). However, the said decision of the Supreme Court does not

hold that 100% damages must be invariably imposed. The decision is

also not authority for the proposition that the circumstances that led

to the default cannot be considered while deciding the quantum of

damages to be imposed. In the facts of the present case, the Tribunal

has not set aside the damages under Section 14-B of the EPF Act. It

has only reduced the quantum of penalty to 50%. This, in my view is

permissible even when the requirement of mens rea and/or actus

reus is no longer a necessary ingredient for levy of damages under

Section 14-B of the EPF Act. It is to be noted that the provisions of

Section 14-B of the EPF Act do not prescribe that a penalty at 100%

is to be mandatorily imposed.

5. In the light of the above, I am of the view that the

Tribunal has committed no illegality in reducing the damages from WP(C) NO. 35163 OF 2019

100% to 50%. I see no ground made out for interference with Ext.P3

order in the exercise of the jurisdiction vested in this Court under

Article 226 of the Constitution of India.

The writ petition fails and it is accordingly dismissed.

Sd/-

GOPINATH P. JUDGE DK WP(C) NO. 35163 OF 2019

APPENDIX OF WP(C) 35163/2019

PETITIONER EXHIBITS EXHIBIT P1 TRUE COPY OF THE APPEAL MEMORANDUM BEARING APPEAL NO.117/2019 FILED BEFORE THE 2ND RESPONDENT BY THE 1ST RESPONDENT.

EXHIBIT P2 TRUE COPY OF THE WRITTEN STATEMENT FILED BY THE PETITIONER HEREIN BEFORE THE 2ND RESPONDENT.

EXHIBIT P3 TRUE COPY OF THE ORDER DATED 02.9.2019 IN APPEAL NO.117/2019 ISSUED BY THE 2ND RESPONDENT.

RESPONDENT EXHIBITS EXHIBIT R1(A) TRUE COPY OF THE DEATH CERTIFICATE DATED 9.12.2004