Madras High Court
The Assistant Provident Fund ... vs The Employees Provident Fund Appellate ... on 4 February, 2025
Author: G.R.Swaminathan
Bench: G.R.Swaminathan
1 W.A.(MD)NO.1260 OF 2020
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 04.02.2025
CORAM
THE HONOURABLE MR.JUSTICE G.R.SWAMINATHAN
AND
THE HON'BLE MR.JUSTICE M.JOTHIRAMAN
W.A.(MD)No.1260 of 2020
The Assistant Provident Fund Commissioner,
Employees Provident Fund Organisation,
Regional Office,
No.1, Ladu Doak College Road,
Madurai – 625 002. ... Appellant/ Petitioner
Vs.
1. The Employees Provident Fund Appellate Tribunal,
Scope Minor Core II, 4th Floor,
Laxmi Nagar District Centre,
Laxmi Nagar, New Delhi – 110 092.
2. M.A.V.M.M.Viravaisyar College,
Kallampatti,
Madurai District. ... Respondents / Respondents
Prayer: Writ Appeal filed under Clause 15 of the Letters
Patent, to allow the writ appeal and set aside the order dated
26.03.2019 passed in W.P.(MD)No.9235 of 2010 on the file of this
Court.
For Appellant : Mr.K.Muralisankar
For Respondents : Mr.C.Karthikeyan
***
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1/12
2 W.A.(MD)NO.1260 OF 2020
JUDGMENT
(Order of the Court was delivered by G.R.SWAMINATHAN, J.)
Heard both sides.
2. The second respondent herein is an establishment covered
under the Employees Provident Fund and Miscellaneous Provisions
Act, 1952. The case on hand pertains to the default period from
1994-2001. The authority levied damages under Section 14B of the
Act. Questioning the same, the establishment filed ATA.No.869(13)
2003 before the appellate Tribunal. The Tribunal after a careful
consideration of the materials on record, reduced the rate of damages
to 15% vide order dated 03.03.2009. Challenging the same, the
Assitant Provident Fund Commissioner, Madurai filed W.P.(MD)No.
9235 of 2010. The learned single Judge vide order dated 26.03.2019
dismissed the writ petition in the following terms:-
“4.According to the learned counsel for the
petitioner, the first respondent failed to take note of the
fact that amendment has been made to Section 14B of the
Act, with effect from 26.09.2008. According to him, the
damages imposed on the second respondent under Section
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14B of the Act cannot be revised by the first respondent,
in view of the amendment under Section 14B, which
came into force with effect from 26.09.2008. According
to the learned counsel for the petitioner, the petitioner
does not have the power to reduce damages under Section
14B r/w Section 32 A and 32 B of Employees Provident
Fund Schemes, 1952. Further, the learned counsel for the
petitioner contended that gross reduction in the levy of
damages will have an adverse impact on the Provident
Fund Schemes. According to him, unless the provident
Fund is maintained intact, there is every chance that it
will be depleted, causing irreparable loss and hardship to
workmen employed by the second respondent.
5.Section 14(B) of the Act reads as follows:
“14B. Power to recover damages where an
employer makes default in the payment of any
contribution to the Fund [the [pension] Fund
or the Insurance Fund] or in the transfer of
accumulations required to be transferred by
him under Sub-Section 15 [ or sub-Section
of Section 17] or in the payment of any
charges payable under any other provision of
this Act or of [any Scheme or Insurance
Scheme] or under any of the conditions
specified under Section 17, [the Central
Provident Fund Commissioner or such other
officer as may be authorised by the Central
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Government, by notification in the Official
Gazette, in this behalf] may recover [from
employer by way of penalty such damages, not
exceeding the amount of arrears, as may be
specified in the Scheme] [Provided that before
levying and recovering such damages, the
employer shall be given a reasonable
opportunity of being heard:] [Provided Further
that the Central Board may reduce or waive
the damages levied under this Section in
relation to an establishment which is a sick
industrial company and in respect of which
Scheme for rehabilitation has been sanctioned
by the Board for industrial and Financial
Reconstruction established under Section 4 of
the Sick Industrial Companies (special
Provisions) Act, 1985 (1 of 1986), subject to
such terms and conditions as may be specified
in the Scheme. ]
6.As seen from Section 14(B), the power to recover
damages from the employer is only discretionary, as the
Section says only “may recover”. In the instant case
admittedly, the second respondent is a company and even
in the reply made to the demand made by the petitioner
for the payment of damages under Section 14B, they have
expressed that they are facing a financial crisis.
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7.The impugned order passed by the first
respondent is a detailed and well considered order. Each
and every ground raised by the petitioner in this writ
petition has been answered in the impugned order dated
03.03.2009, passed by the first respondent. The first
respondent has rightly held that the imposition of
damages under Section 14B of the Act is only
discretionary. As rightly observed, Section 14B does not
mandate that the order for damages must follow in the
event of every default. As seen from the materials
available on record, there was no deliberate intention on
the part of the second respondent to delay the payment of
Provident Fund.
8.The Tribunal has rightly held that the regulation
32A in which a graded scale for imposition of damages
has been provided cannot be regarded as a rigid or
inflexible prescription and regulations cannot be a fetter
to the exercise of the power that is conferred upon the
Provident Fund Commissioner by the provisions of the
enactment, but guide and channelise the exercise of
discretion. The Tribunal has also rightly held that neither
regulation 32A or 32B can be regarded as inflexible. The
Tribunal has also rightly held that the words used in
Clause 32A that “may recover from the employer by way
of penalty damages at the rates given below” would also
suggest and the same is intended only as a guideline and
is not mandatory. The Tribunal has also followed the
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Judgment of High Court of Kerala in the case of Indian
Telephone Industries Limited Vs. APFC and others
reported in 2006(3) KLJ 698 and the decision of High
Court of Bombay in the case of M/s.Cable Corporation of
India Ltd. Vs. Union of India reported in 2006 (003) CLR
349 Bombay and the decision of Honourable Supreme
Court in the case of Organo Chemical Industries and
another Vs. Union of India and Others reported in AIR
1979 SC 1803, while coming to the conclusion.
9.This Court does not find any infirmity in
restricting the damages imposed on the second respondent
up to 15% per annum on the arrears of contribution. This
Court is in agreement with the view taken by the Tribunal
in following the decision of the High Court of Orissa in
the case of Bhubaneswar City Distribution Division Vs.
Union Of India and another reported in 1998 II LLJ 1044
for the said purpose.”
3. Challenging the same, the Assistant Provident Fund
Commissioner filed this appeal. The learned Standing counsel
appearing for EPFO pointed out that the Tribunal did not take note
of the unamended provision of the statute which alone applies to the
case on hand.
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4. This contention may be technically sound. But then, we
cannot lose sight of the subsequent developments. The learned
counsel appearing for the second respondent drew our attention to
the order dated 15.04.2024 passed by the Hon'ble Division Bench in
W.A.(MD)No.298 of 2024 which reads as follows:-
“11.A perusal of the section 14-B of the Act
would clearly indicate that the Provident Fund
Commissioner or any other officer authorized by the
Central Government may recover from the employer
such damages not exceeding the amount of arrears as
may be specified in the scheme contemplated under
para 32-A of the Act. The first proviso to the above
section makes it clear that the before levying and
recovering of such damages, the employer should be
given a reasonable opportunity of being heard. The
second proviso confers power upon the central board to
reduce or waive damages which is a sick industrial
company subject to the terms and conditions as
specified in the scheme in paragraph No.32-B.
12. A perusal of Section 7-I and 14-B makes it
clear that all orders including the order passed by the
Central Board under Section 14-B are also appealable
to the Appellate Tribunal. When the order of Central
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Board is appealable to the Appellate Tribunal, the
contentions of the learned counsel appearing for the
appellant that the Central Board (Original Authority)
would have exclusive power to reduce or waive
damages, but the Appellate Tribunal (Appellate
Authority) would not have any power to reduce or
waive damages is not legally acceptable.
13.A close reading of Section 7-L would reveal
that the Tribunal has got power either to confirm,
modify or to annul the orders of the original authority
or it can remit it back to the original authority for fresh
adjudication. Therefore, the power of the Appellate
Tribunal to modify the orders of the original authority
cannot be in dispute. The original authority cannot
contend that his orders cannot be modified or set aside
by the Appellate Authority. It is very strange that the
original authority had questioned the power of his
Appellate Authority by way of filing this writ petition.
14.A comparative reading of 7-Q which relates to
imposition of interests for the belated payment of their
contribution amount and damages under Section 14-B
of the Act clearly reveals that the imposition of interest
is automatic and it is not necessary to provide any
opportunity of being heard to the employer. But before
imposing damages, hearing is mandatory. Therefore, it
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is clear that some kind of discretion is vested with the
authorities to consider the mitigating circumstances
before imposing the damages. If there is no discretion
whatsoever, the legislature would not have mandated
granting of opportunity to the employer before
imposing damages.
15.A Division Bench of Bombay High Court in a
Judgement reported in 2011-III-LLJ 446 (Bombay)
( Regional Provident Fund Commissioner, Sub-
Regional Office, Nagpur Vs. Manoharbhai Ambalal,
Gondia) has categorically held that the Appellate
Tribunal under the EPF Act has got powers to reduce
the damages imposed on the employer. The Division
Bench of our High Court in a recent decision reported
in 2023-IV-LLJ-234(Mad) ( Laven Technoblend
Limited, Formerly known as M/s.Coimbatore Popular
Spinning Mills Ltd., Tirupur District Vs. Regional
Provident Fund Commissioner, Coimbatore and others)
in paragraph No.11 is held has follows:
“11..... Now, after the formation of the
Tribunal in 1996, pursuant to the introduction
of Section 7-I of EPF Act, even bypassing para
32B, the aggrieved person can approach the
Tribunal for relief. Firstly, it is a time saving
process. In case, the matter is taken up by the
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Central Board of Trustees and in case of
adverse order, it is open to the party to
challenge the same before the Tribunal. There
is no guarantee about the time by which the
Central Board might dispose of the
application. The Tribunal presided over by a
judicial officer is empowered to decide about
the grant of waiver or reduction of damages
that is levied by the authority concerned.
Hence, we are of the view that in the case on
hand, the order of the learned Single Judge
interfering with the order of the Tribunal is not
correct and the order passed in the writ petition
is set aside.”
16.In view of the above said deliberations, we are
of the considered opinion that the Appellate Tribunal
which is an Appellate Authority not only for the
authorized officer under the Act, but also for the Central
Board, is empowered to reduce or waive damages as per
the scheme. In the present case, in exercise of the said
powers, the Appellate Tribunal has reduced the
damages to 15%. Therefore, we do not find any
illegality or infirmity in the order passed by the
Appellate Tribunal or by the writ Court in confirming
the order passed by the Appellate Tribunal. There are no
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merits in the writ appeal. The Writ Appeal stands
dismissed. No costs.”
5. We are respectfully following the very same approach and
holding that interference with the impugned order passed by the
learned single Judge is not warranted. This writ appeal stands
dismissed. No costs.
(G.R.SWAMINATHAN, J.) & (R. POORNIMA, J.)
4th February 2025
NCC : Yes / No
Index : Yes / No
Internet : Yes/ No
PMU
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G.R.SWAMINATHAN,J.
AND
R.POORNIMA, J.
PMU
04.02.2025
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