Madras High Court
The Central Board Of Trustees Through vs The Employees' Provident Fund on 6 February, 2025
Author: G.R.Swaminathan
Bench: G.R.Swaminathan
W.A.(MD)No.1258 of 2021
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 06.02.2025
CORAM
THE HONOURABLE MR.JUSTICE G.R.SWAMINATHAN
AND
THE HONOURABLE MR.JUSTICE M.JOTHIRAMAN
W.A(MD)No.1258 of 2021
The Central Board of Trustees through
The Assistant Provident Fund Commissioner,
Employees' Provident Fund Organisation,
Regional Office,
No.1, Lady Doak College Road,
Madurai ... Appellant /
Petitioner
Vs.
1.The Employees' Provident Fund
Appellate Tribunal,
Scope Minor, Core II, 4th Floor,
Lakshmi Nagar District Centre,
Lakshmi Nagar,
New Delhi – 92.
2.M/s.Sri Lakshmi Spinners (P) Limited,
Madurai Road,
Virudhunagar. ... Respondents /
Respondents
Prayer: Writ Appeal filed under Clause 15 of Letters Patent Act pleased
to allow the writ appeal and set aside the order dated 26.03.2019 made in
W.P(MD)No.9237 of 2010 on the file of this Court.
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1/10
W.A.(MD)No.1258 of 2021
For Appellants : Mr.K.Muralisankar
For Respondents : Mr.M.Saravanan for R.2
JUDGMENT
(Judgment of the Court was delivered by G.R.SWAMINATHAN, J.)
Heard both sides.
2.The second respondent herein is an establishment covered
under Employees Provident Fund and Miscellaneous Provisions Act,
1952. The case on hand pertains to the default period from 1997-2000.
The establishment committed default in remitting the contribution under
Section 7(A) of the Act. Subsequently, they cleared the liability and also
paid the interest. But there was delay in clearing the liability. Hence, the
authority invoked the power under Section 14B of the Act and levied
penalty on the establishment. Aggrieved by the same, the establishment
filed ATA No.1(13) 2007 before the appellate Tribunal. The appellate
Tribunal vide order dated 08.09.2009 reduced the damages to 5% per
annum on the arrears of contribution. Challenging the same, the Assistant
Provident Fund Commissioner, Madurai filed W.P(MD)No.9237 of
2010. The learned single Judge vide order dated 26.03.2019 dismissed
the writ petition in the following terms:
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“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.
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 08.09.2009, 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
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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
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 5% 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.”
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Challenging the same, the Assistant Provident Fund Commissioner filed
this appeal.
3.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 Board is
appealable to the Appellate Tribunal, the contentions of the
learned counsel appearing for the appellant that the Central
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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 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.
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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 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.”
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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 merits
in the writ appeal. The Writ Appeal stands dismissed. No
costs.”
Section 7L of the Act enables the Tribunal to confirm, modify or annul
the order passed by the original authority. Therefore, this Court has been
consistently holding that the Tribunal has the power to reduce the
quantum of damages levied by the authority. The learned single Judge
was of the view that the discretion exercised by the Tribunal did not call
for interference. We are of the view that no case has been made out for
interfering the well considered order passed on by the learned single
Judge.
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4.This Writ Appeal stands dismissed. No costs. Consequently,
connected miscellaneous petition is closed.
[G.R.S., J.] [M.J.R., J.]
06.02.2025
NCC : Yes / No
Index : Yes / No
Internet : Yes/ No
MGA
To
1.The Employees' Provident Fund
Appellate Tribunal,
Scope Minor, Core II, 4th Floor,
Lakshmi Nagar District Centre,
Lakshmi Nagar,
New Delhi – 92.
2.M/s.Sri Lakshmi Spinners (P) Limited,
Madurai Road,
Virudhunagar.
https://www.mhc.tn.gov.in/judis
G.R.SWAMINATHAN,J.
AND
M.JOTHIRAMAN, J.
MGA
06.02.2025
https://www.mhc.tn.gov.in/judis
