Madras High Court
Tiruchirappalli Sarvodaya Sangh vs The Presiding Officer on 1 April, 2021
W.P.(MD)No.12418 of 2011
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 01.04.2021
CORAM:
THE HONOURABLE MR.JUSTICE M.DHANDAPANI
W.P.(MD)No.12418 of 2011
and
M.P.(MD)No.1 of 2011
Tiruchirappalli Sarvodaya Sangh,
Head Office at
No.108, T.P.K.Road,
Madurai – 625 001
Rep. by its Secretary. ... Petitioner
versus
1. The Presiding Officer,
Employees Provident Fund Appellate
Tribunal,
Scope Minar, Core-II-4th Floor,
Lakshmi Nagar, New Delhi – 110 092.
2. The Assistant Provident Fund Commissioner,
Employees' Provident Fund Organisation,
Sub Regional Office, No.18, Shree Complex,
Madurai Road, Tiruchirappalli. ...Respondents
Writ Petition filed under Article 226 of the Constitution of India,
praying for the issuance of Writ of Certiorari, to call for the records from the
file of the 1st respondent herein in A.T.A.No.425(13)/2009 and to quash the
order dated 06.06.2011 passed therein.
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1/9
W.P.(MD)No.12418 of 2011
For Petitioner : Mr.A.Sivasubramanian
For Respondents : Mr.M.Palanimuthu,
Standing Counsel for R2
ORDER
This writ petition has been filed by the petitioner seeking for the
issuance of Writ of Certiorari to call for the records relating to the order dated
06.06.2011 passed by the 1st respondent in A.T.A.No.425(13)/2009 and quash
the same.
2. The case of the petitioner is that the petitioner Sangh is a Society
registered under the Societies Registration Act and now, amalgamated with
one part of Tamil Nadu Sarvodaya Sangh. In the year 1997, as a part of
celebration of “Golden Year of Indian Independence”, the Central and State
Governments together declared a rebate of 40% of Kahdi and Silk Varieties,
which was to be shared in the proportion of 25% and 15% by the Centre and
State respectively. Based on the declaration, the petitioner sold the products
on rebate at a reduced price. Due to non-releasing of rebate amount, all the
Sanghs in Tamilnadu faced difficulty in running the business. In spite of many
representations, no payment was made. While so, in the month of May 2009,
the second respondent passed an order imposing penal damages of
Rs.17,70,055/- under Section 14B and interest of Rs.5,76,468- under Section
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W.P.(MD)No.12418 of 2011
7Q of the Employee's Provident Funds and Miscellaneous Provisions Act,
1952 for the period 1994-1995 to 2007-2008 on account of the delay in
remitting the Provident Fund dues. Challenging the same, the petitioner
preferred an appeal before the 1st respondent in A.T.A.No.425(13)/2009 under
Section 7-I of the Act. However, the 1st respondent, vide its order dated
06.06.2011, dismissed the appeal. Aggrieved over the same, the present writ
petition has been filed.
4. The learned counsel appearing for the petitioner submits that due
to non-releasing of rebate amount, the petitioner faced financial crisis, due to
which, there was a delay in remitting the EPF contribution, which is neither
willfully nor wanton. It is further submitted that though the petitioner
explained sufficient cause for non-payment of EPF contribution in time, the
second respondent, without considering the same, passed the order levying
damages and interest, which unsustainable in law. The appellate Tribunal also,
without considering the said facts, dismissed the appeal, which is non-est in
law.
5. The learned counsel for the petitioner further submits that it is not
mandatory on the part of the authority to impose damages in each and every
cases. The authority has to consider the prevailing situation for non-payment
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W.P.(MD)No.12418 of 2011
of contribution at the relevant point of time. Only if the authority comes to the
definite conclusion, on the basis of materials, that there is no mens rea, then
only, damages can be imposed. Attention of this Court was drawn to the
decision of the First Bench of this Court in R.D.34 Ariyakudi Primary
Agricultural Co-operative Bank vs. Employees' Provident Fund Appellate
Tribunal, New Delhi & Ors. and, therefore, submitted that similar order be
passed in the present case as well.
5. On the above contention, this Court heard the learned Standing
Counsel appearing for the 2nd respondent and perused the materials as also the
decisions relied to by the learned counsel for the petitioner.
6. Similar issue fell for consideration before the First Bench of this
Court in R.D.34 Ariyakudi Primary Agricultural Co-operative Bank vs.
Employees' Provident Fund Appellate Tribunal, New Delhi & Ors. A
perusal of the facts of the said case reveal that in the said case, the company
failed to remit the PF dues in time and being not satisfied with the explanation
given by the Company to the show-cause notice issued in the proceedings
u/s 14-B of the Act, order levying damages was passed, which was challenged
before the Appellate Tribunal, which was dismissed against which challenge
was made before this Court. The First Bench, after referring to the decisions
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W.P.(MD)No.12418 of 2011
of the Hon'ble Supreme Court, remitted the matter to the authorities for
consideration of the issue on the question of mens rea before levying damages.
The relevant portion of the said order reads as follows:
“5. Learned counsel for the appellant placed reliance on
the Judgment of the Hon'ble Supreme Court in Mcleod
Russel India Limited v. Regional Provident Fund
Commissioner, Jalpaiguri and others reported in
MANU/SC/0561/2014 : (2014) 15 Supreme Court Cases
263, wherein, the Hon'ble Supreme Court has held as under:
“11. In HMT Ltd., [ESI Corpn. v. HMT Ltd.,
MANU/SC/0488/2008 : (2008) 3 SCC 35 : (2008) 1 SCC
(L&S) 558], this Court noted the beneficial nature of the
ESIC Act – that subordinate legislation must conform to
the provisions of the parent Act. Despite giving due regard
to the use of the words “may recover damages by way of
penalty”, and mindful that mens rea and actus reus to
contravene a statutory provision are necessary ingredients
for levy of damages, this Court set aside the interference of
this Court vis-a-vis the imposition of damages and further
held that imposition of damages by way of penalty was not
mandated in each and every case. The dispute was
remitted back to the High Court for fresh consideration,
i.e. to proceed on the premise that the levy of penalty under
the Act was not a mere formality a foregone conclusion or
an inexorable imposition; and that the circumstances
surrounding the failure to deposit the contribution of the
employees concerned would also have to be cogitated
upon. This decision does not prescribe that damages or
penalties cannot or ought not to be imposed. Further, the
presence or absence of mens rea and/or actus reus would
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W.P.(MD)No.12418 of 2011
Section 14-B, as also the quantum thereof since it is not
inflexible that 100 per cent of the arrears have to be
imposed in all the cases. Alternatively stated, if damages
have been imposed under Section 14-B, it will be only
logical that mens rea and/or actus reus was prevailing at
the relevant time. We may also note that this Court had yet
again reiterated the well-known but oft ignored principle
that High Courts or any Appellate Authority created by a
statute should not substitute their perspective of discretion
on that of the lower Adjudicatory Authority if the impugned
order does not otherwise manifest perversity in the process
of decision taking. HMT Ltd. does not proscribe
imposition of damages; that would negate the interest of
the legislature. The submission of the petitioner before us
is that the liability was of the erstwhile management and
since the petitioner was not the “employer” at the relevant
time, default much less deliberate and wilful default on the
part of the petitioner was absent. However, it seems to us
that once these damages have been levied, the
quantification and imposition could be recovered from the
party which has assumed the management of the
establishment concerned.”
6. The said judgemnt has been followed by the Hon'ble
Supreme Court in Assistant Provident Fund Commissioner,
EPFO v. Management of RSL Textiles India Pvt. Ltd.,
through its Director reported in MANU/SC/0028/2017 :
(2017) AIR (SCW) 679.
7. A perusal of the orders of the authorities below and
the learned Single Judge shows that the authorities below
and the learned Single Judge have not applied their mind to
the fact as to whether the reason as put forward by the
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appellant is sufficient to waive payment or not and what
W.P.(MD)No.12418 of 2011
should be the proportionality in imposing the damages.
8. In view of the fact that the authorities below have not
applied their mind and in view of the fact that the
Honourable Supreme Court has held that mens rea is an
essential ingredient, the appeal is allowed and the impugned
order of the learned Single Judge and the orders passed by
the authorities below are set aside. The matter is remitted
back to the Assistant Provident Fund Commissioner to once
again consider the issue of mens rea before levying the
damages and the said exercise may be completed within a
period of twelve weeks from the date of receipt of a copy of
this order. It goes without saying that the Assistant
Provident Fund Commissioner will give reasonable
opportunity to the appellant as well as the respondents.
However, there shall be no order as to costs. Consequently,
connected miscellaneous petitions are closed.”
7. A perusal of the facts in the present case is identical to the facts as
were placed before the First Bench of this Court in the decision supra. In such
circumstances, this Court is of the considered view that an order, in identical
terms, remitting the matter back to the concerned authority, requires to be
passed in this case as well to decide on the question of mens rea.
8. In the aforesaid circumstances, following the ratio laid down in
the decision supra, the orders passed by the authorities below are set aside and
the writ petition is allowed by remitting the matter back to the second
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W.P.(MD)No.12418 of 2011
respondent to consider the issue of mens rea before levying the damages and
pass appropriate orders after giving an opportunity of personal hearing to the
concerned parties. The said exercise shall be completed within a period of six
months from the date of receipt of a copy of this orders. No costs.
Consequently, connected miscellaneous petition is closed.
01.04.2021
Index : Yes / No
Internet : Yes / No
ogy
To
1. The Presiding Officer,
Employees Provident Fund Appellate
Tribunal,
Scope Minar, Core-II-4th Floor,
Lakshmi Nagar, New Delhi – 110 092.
2. The Assistant Provident Fund Commissioner,
Employees' Provident Fund Organisation,
Sub Regional Office, No.18, Shree Complex,
Madurai Road, Tiruchirappalli.
http://www.judis.nic.in
W.P.(MD)No.12418 of 2011
M.DHANDAPANI, J.
ogy
W.P.(MD)No.12418 of 2011
01.04.2021
http://www.judis.nic.in
