Kerala High Court
M/S.Charangattu Constructions vs *The Regional Provident P.F. ... on 17 October, 2025
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W.P.(C).No.14866 of 2011
1
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE S.MANU
FRIDAY, THE 17TH DAY OF OCTOBER 2025 / 25TH ASWINA, 1947
WP(C) NO. 14866 OF 2011
PETITIONER:
M/S.CHARANGATTU CONSTRUCTIONS
ENGINEERS AND CONTRACTORS, CHERTHALA,
ALAPPUZHA DISTRICT, KERALA STATE,
REPRESENTED BY ITS MANAGING PARTNER,
C.K.SASANKAN.
BY ADVS.
SRI.M.R.NANDAKUMAR
SHRI.T.K.RAJESH KUMAR
RESPONDENTS:
1 *[THE REGIONAL PROVIDENT P.F. COMMISSIONER,
SUB REGIONAL OFFICE, KALOOR, KOCHI-682 017,
KERALA.]
*[THE DESCRIPTION OF THE FIRST RESPONDENT IS
AMENDED AS 'THE REGIONAL PROVIDENT FUND
COMMISSIONER,
SUB REGIONAL OFFICE, KALOOR, KOCHI-682 017,
KERALA' AS PER THE ORDER DATED 08.06.2011 IN IA
NO.8663/2011 IN WP(C) NO.14866/2011.]
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W.P.(C).No.14866 of 2011
2
2 THE ASST.PROVIDENT FUND COMMISSIONER
SUB REGIONAL OFFICE, KALOOR, KOCHI-682017.
3 **[THE PROVIDENT FUND APPELLATE TRIBUNAL,
NEW DELHI, PIN-110 001.]
**(THE DESCRIPTION OF THE 3RD RESPONDENT IS
AMENDED AS 'THE EMPLOYEES PROVIDENT FUND
APPELLATE TRIBUNAL,
NEW DELHI' AS PER THE ORDER DATED 08.06.2011 IN
IA No.8663/2011 IN WP(C) NO.14866/2011.)
***
ADDL.R4 RISHA,
AGED 42 YEARS, D/O.LATE SASANKAN,
RESIDING AT CHANKARANKATTU HOUSE,
MARARIKULAM NORTH VILLAGE, KANICHUKULANGARA P.O.,
ALAPPUZHA 688 582.
ADDL.R5: MILI,
AGED 40 YEARS, D/O.LATE SASANKAN,
RESIDING AT CHANKARANKATTU HOUSE,
MARARIKULAM NORTH VILLAGE, KANICHUKULANGARA P.O.,
ALAPPUZHA - 688 582,
REPRESENTED BY HER POWER OF ATTORNEY RISHA,
AGED 42 YEARS, D/O.LATE SASANKAN,
RESIDING AT CHANKARANKATTU HOUSE,
MARARIKULAM NORTH VILLAGE, KANICHUKULANGARA P.O.,
ALAPPUZHA 688 582.
***(ADDL.R4 & R5 ARE IMPLEADED AS PER THE ORDER
DATED 14.12.2022 IN IA NO.2/2022 IN
WP(C)NO.14866/2011).
BY ADVS. SRI.A.RAJASIMHAN
DR.S.GOPAKUMARAN NAIR (SR.)
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON
17.10.2025, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
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W.P.(C).No.14866 of 2011
3
S.MANU, J.
--------------------------------------------------
W.P.(C).No.14866 of 2011
-------------------------------------------------
Dated this the 17th day of October, 2025
JUDGMENT
Petitioner establishment is a construction company covered
by the provisions of Employees' Provident Funds and
Miscellaneous Provisions Act, 1952. According to the petitioner,
on account of financial difficulties, there was failure to remit
contributions for the period March 1999 to February 2001 on
time. Petitioner contends that the delay was due to reasons
beyond its control. A notice under Section 14B of the Act was
issued on 08.02.2003 by the authorities to recover damages.
Petitioner was provided an opportunity of hearing. Ext.P1 notice
was issued charging Rs.45,962/- towards interest under Section
7Q of the Act. Petitioner remitted the amount on 19.3.2003.
Afterwards, Ext.P2 order was issued, assessing Rs.1,35,246/-
towards damages for the delay in remitting the contributions.
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Petitioner challenged Ext.P2 before the Employees' Provident
Fund Appellate Tribunal. By Ext.P3 order dated 09.12.2010, the
appeal was dismissed. Challenging the order passed by the
Appellate Authority, petitioner filed this writ petition.
2. The only contention of the petitioner is that there was
no willful default on the part of the petitioner in remitting the
amounts on time. Petitioner submits that the delay was caused
on account of acute financial difficulties. Petitioner contends
that the levy of damages for failure to pay contributions is not
imperative in all situations. On the contrary, the Employees
Provident Fund Organization (EPFO), in its statement, contends
that the petitioner establishment is indisputably covered under
the provisions of the Employees' Provident Funds and
Miscellaneous Provisions Act, and under the provisions of the
statute, belated remittance of statutory dues will attract penal
damages under Section 14B of the Act at the rates prescribed
under paragraph 32A of the EPF Scheme, and also simple
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interest at the rate of 12% per annum under Section 7Q of the
Act.
3. Heard the learned counsel for the petitioner and also
the learned Standing Counsel for the EPFO.
4. Learned counsel for the petitioner submitted that the
petitioner had been regularly remitting contributions and delay
in payment occurred only during a brief period on account of
financial difficulties. He submitted that there was no willful
laches or negligence and hence the imposition and levy of
damages is improper and illegal. Learned counsel placed heavy
reliance on the following judgments:-
1. Harrisons Malayalam Ltd. (M/s.) v. Regional
Provident Fund Commissioner and others
[2012 (1) KHC 243],
2. Employees Provident Fund Organisation,
Kozhikode v. M/s.Sreekamakshy Agency
(P) Ltd., Kozhikode and another [2013 (2)
KHC 773],
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3. Sreekamakshy Agency (P) Ltd. (M/s.) v.
Employees Provident Fund Appellate
Tribunal and Another [2013 (1) KHC 457],
4. Standard Furniture, Calicut v. Registrar,
EPF Appellate Tribunal and Another [2020
(3) KHC 793].
5. In Standard Furniture's case (supra), the Division
Bench considered the fact that the establishment was
completely closed and payments made towards damages were
treated as sufficient penalty. The Division Bench observed that
the levy of damages under Section 14B of the Act is not
automatic and that all the circumstances which led to the delay
in remitting the contributions have to be factored by the
authorities concerned before issuing an order under Section
14B. The Division Bench relied on the judgments in Harrisons
Malayalam Ltd. (supra), Sreekamakshy Agency (P) Ltd
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(supra). and Employees' Provident Fund Organisation v.
Sreekamakshy Agency (P) Ltd. (supra). In Harrisons
Malayalam Ltd. (supra), a learned Single Judge of this Court
undertook a detailed analysis of the scope and object of Section
14B and held that the imposition of damages is punitive in
nature. It was held that there must be application of mind
taking into account the reasons for the delay and whether the
delay could have been avoided by ordinary diligence by the
employer. In Sreekamakshy Agency (P) Ltd. (supra), another
learned Single Judge held that though a statutory right is
available to the department to recover damages, the law does
not mandate that in all cases damages should be imposed. The
following observations in the judgment are relevant in the
context of the case at hand:-
"9. Damages is levied for the deliberate non-payment of
the contributions in time as held in the judgments
referred above. Therefore, the authorities under the Act
has to assess as to whether the damages is not paid
due to any deliberate inaction on the part of the
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employer concerned or if his actions are contumacious
or dishonest. If the reasons stated by the employer are
correct, wherein financial constraints is also a matter
relevant to be looked into in considering whether the
damages can be levied at all. Each case will have to be
dealt with under the special facts of that particular case.
In the present case the petitioner had shown that the
Company had suffered a loss of more than 51 lakhs for
a period which apparently is the reason for non-
payment of contribution. The fact that stone ware pipes
lost a market during the relevant time and the main
consumer Kerala Water Authority could not pay the
value of the pipes purchased from the petitioner
company are all matters which are relevant to be
considered while exercising the jurisdiction given to the
original authority and appellate authority for demanding
damages. Therefore, the authorities under the Act were
under the obligation to consider the levy of damages
objectively and in relation to the peculiar facts and
circumstances of the case. In most of the cases, I am
sure that the financial constraints will be a factor which
also has to be treated as a relevant factor in imposing
damages. If one has the money to pay and he
deliberately withholds payment of contribution, there is
scope for the authorities to impose damages. But if it is
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shown that one was under severe financial constraints
on account of reasons stated and the documents in
support of the said fact is produced, the authorities are
bound to consider the same in a pragmatic manner and
not taking a pedantic approach. Hence, I do not think
that the reasoning of the appellate authority was
justified. The authorities under the Act had failed to
consider relevant matters and therefore judicial review
is possible."
6. Judgment of the learned Single Judge in
Sreekamakshy Agency (P) Ltd. (supra) was affirmed by the
Division Bench in EPFO, Kozhikode v. Sreekamakshy
Agency (P) Ltd (supra).
7. Learned Standing Counsel for EPFO relied on the
judgments of the Hon'ble Supreme Court in Organo Chemical
Industries and Another v. Union of India and others
[(1979) 4 SCC 573] and Horticulture Experiment Station,
Gonikoppal, Coorg v. The Regional Provident Fund
Organization [(2022) 4 SCC 516]. He also referred to an
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unreported judgment of a learned Single Judge of this Court in
W.P.(C)No.17536/2009, which was upheld by a Division bench in
W.A.No.728/2023. However, perusal of the judgments relied on
by the learned Standing Counsel shows that, in all those cases,
the issue under consideration was as to whether the existence
of mens rea is a relevant aspect in imposing damages.
8. The only issue raised by the petitioner in this case is
that the delay in making the payments was not willful but on
account of severe financial difficulties. The original and appellate
authorities held that financial stringency of an employer is not a
valid defence to resist the imposition of damages under Section
14B. The said view is not consistent with the law laid down by
this Court in the judgments cited by the learned counsel for the
petitioner. The decisions cited by the learned Standing Counsel
for EPFO do not lay down the proposition that the financial
difficulties of the employer cannot be considered as a relevant
circumstance while imposing damages under Section 14B.
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9. I, therefore, set aside Ext.P3. Ext.P2 order also
cannot be sustained in view of the law laid down by this Court in
the decisions relied on by the learned counsel for the petitioner.
Hence, the said order is also set aside. Second respondent shall
consider the issue afresh after providing an opportunity of
hearing to the petitioner and pass orders within a period of
three months from the date of production of a copy of this
judgment. The second respondent shall advert to the judgments
of this Court relied on by the learned counsel for the petitioner
while taking a fresh decision in the matter.
The writ petition is disposed of as above.
Sd/-
S.MANU
JUDGE
skj
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APPENDIX
PETITIONER'S EXHIBITS:-
EXT.P1 COPY OF THE NOTICE No.KR/KC/13397/damage
cell/7Q/T(1)/2003 dated nil.
EXT.P2 COPY OF THE ORDER No.KRKC/13397/PD/B/T(I)2003
DTD,21.2.2003.
EXT.P3 COPY OF ORDER IN APPEAL IN ATA No.449(7)2003
DTD.9.12.2010.
