Madras High Court
The Regional Provident Fund ... vs The Presiding Officer on 20 February, 2025
W.P.(MD) No.12974 of 2016
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 20.02.2025
CORAM:
THE HONOURABLE MR.JUSTICE MUMMINENI SUDHEER KUMAR
W.P.(MD) No.12974 of 2016
and
W.M.P.(MD) No.9772 of 2016
The Regional Provident Fund Commissioner
Employees Provident Fund Organization
P.B.No.588, Sree Complex, 'D' Block
No.18, Madurai Road, Tiruchirapalli ... Petitioner
-vs-
1.The Presiding Officer
Employee's Provident Fund
Appellate Tribunal
Scope Minor, Core II, 4th Floor
Lakshmi Nagar District Centre
Lakshmi Nagar, New Delhi
2.M/s.Tamil Nadu Asbestos (Pipes)
(A Unit of Tamil Nadu Cement Corp. Ltd.)
Mayanur, Karur District-639 108
rep.through its
Deputy General Manager / Unit – Head ... Respondents
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W.P.(MD) No.12974 of 2016
PRAYER: Petition filed under Article 226 of the Constitution of India, to issue
a writ of certiorarified mandamus to call for the records relating to the order
passed by the first respondent in A.T.A.No.442(13)2012, dated 04.03.2013
and quash the same as unconstitutional and consequently direct the second
respondent to pay the damages as Proceedings
No.SDC/TN/TRY/19983/Circle-24/SRO-TRY/2011, dated 26.04.2012, within
a time frame as fixed by this Court.
For Petitioner : Mr.I.Pinaygash
For Respondents : R1 – Tribunal
Mr.A.Sivaji for R2
ORDER
This writ petition has been filed by the Employees Provident Fund
Organisation questioning the order dated 04.03.2013, passed in A.T.A.No.
442(13)2012, on the file of the Employees' Provident Fund Appellate Tribunal,
New Delhi, whereby the appeal filed by the second respondent herein was
allowed by placing reliance upon a decision of the Honourable Apex Court in
the case of Employees' State Insurance Corporation vs. HMT Ltd., and
another, reported in (2008) 3 SCC 35, on the ground that there was no
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willful default on the part of the second respondent in remitting the provident
fund contributions belatedly and there is no finding recorded by the petitioner
holding that the second respondent has willfully and deliberately withheld the
provident fund contributions.
2. As a matter of fact, the above referred decision was overruled
by the subsequent decision of the Honourable Supreme Court in the case of
Horticulture Experiment Station vs. Provident Fund Organisation,
reported in (2022) 4 SCC 516 and thereafter, a Full Bench of this Court,
having taken note of the said decision i.e., the decision in the case of
Horticulture (cited supra), by a common Judgment dated 03.06.2024, passed
in W.P.(MD) Nos.7339, 9688 of 2013, 2765 & 2782 of 2014, has laid down
certain guidelines in Paragraph No.39 in the matter of deciding the liability
under Section 14B of the Employees Provident Fund and Miscellaneous
Provisions Act, 1952 (in short, “the Act, 1952”). Paragraph No.39 of the said
decision reads as under:
39.Therefore, following the principles reiterated by
the Hon'ble Supreme Court and different High Courts
including our High Court in similar circumstances, this
Court hold that Section 14B of the Act is an enabling
provision and it does not envisage any compulsion to levy
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damages in all cases, and is inclined to frame the following
guidelines:-
(i) Before levying damages in terms of Section
14B of the Act, every authority is required to
follow principles of natural justice. The
particulars of the default, period, etc., and
every adverse information that may be relied
upon for levying damages should be indicated
or furnished to the employer and a fair
opportunity should be given to the employer to
put forth his case in defence to the proposed
action.
(ii) The authority, while exercising power under
Section 14B, shall keep in mind that the
liability as per the table given in Para 32A of
the Scheme, should be treated as upper limit
within which damages can be levied for the
delay in making contributions by the employer.
(iii) In appropriate cases where the employer is
able to provide sufficient reasons or cause
justifying the delay with verifiable materials,
the authority is competent to waive or fix the
quantum of damages less than what is shown
in the table under Para 32A of the Scheme.
(iv) When an employer is not in a position to make
payment in order to save the industry from
closure or on account of protecting the industry
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or establishment from being put to face
proceedings under the SARFAESI Act or other
inevitable circumstances which compels the
employer to divert the funds only to save the
industry and the employees, there cannot be a
levy of damages.
(v) The authority under the Act has to consider all
the mitigating circumstances including
financial difficulties projected by the employer
and pass a reasoned order.
(vi) When the employer is able to produce all the
documents or verifiable material within his
reach to substantiate any mitigating
circumstance, the authority exercising power
under Section 14B has to pass orders giving
reasons, if he is unable to find truth or bona
fides in the claim of the employer.
(vii) There shall be proper application of mind
objectively on the merits of each case and in
any case, the authority cannot resort to the
arithmetical calculation or for levying damages
as per Para 32A of the Scheme without
considering the mitigating circumstances.
(viii) While assessing the quantum of damages, the
past and present conduct of the employer also
should be taken note of. For example, there
can be levy of damages as per Para 32-A of
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EPF Scheme in every case when the employer
is a chronic defaulter despite having surplus
funds or found to have diverted funds.
(ix) There may be variety of circumstances to
which the employer is put to while managing
an industrial establishment or a factory within
the purview of the Act. The proviso to Section
14B gives a special power to the Board to
waive damages when a rehabilitation scheme
is pending before the BIFR. There may be
similar circumstances for the employer of any
industry to save the industry from the clutches
of private/public financial institutions and the
employer might be facing proceedings under
the SARFAESI Act. Whenever the employer is
forced to make huge amounts by mobilizing
funds from other resources to save the
industry from closure or to avoid similar
situations, such payment need not be
considered as an act to avoid payment of
provident fund dues.
(x) The delay in payments by profit making
establishments has to be seriously viewed and
every profit making employer is bound to pay
the provident fund contributions promptly,
unless there are strong reasons or
circumstances that prevent the employer from
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making the payment on the due dates. If there
is an element of willful negligence in payment
of Provident Fund dues, the Assistant
Provident Fund Commissioner or the
competent authority can levy damages
exercising his discretion.
(xi) Though mens rea is not an essential
ingredient, there cannot be levy of damages at
the maximum limit merely because there is a
default. Before levying damages, there must
be definite finding or reason, after considering
the explanation or reasons given by the
employer for the delay in payment of dues and
other mitigating circumstances. The discretion
vested with the Assistant Provident Fund
Commissioner or the competent authority shall
be exercised judiciously in tune with the
settled principles of law and keeping in mind
the interest of the employees concerned.”
3. The learned counsel appearing for the second respondent
strenuously contended that there is abnormal delay on the part of the
petitioner in filing the present writ petition as the impugned order was passed
as early as in the year 2013 and the present writ petition came to be filed only
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in the year 2016. He further contended that the Assistant Provident Fund
Commissioner is not the competent authority and it is only the Commissioner,
who is the competent authority to pass orders under Section 14B of the Act,
1952 and in the absence of any such delegation of power, the order passed by
the Assistant Provident Fund Commissioner under Section 14B of the Act,
1952 is liable to be set aside as it was passed without jurisdiction.
4. Insofar as delay in filing the writ petition is concerned, this
Court finds no reason to disallow the petition on this sole ground for the
simple reason that the Act, 1952 is a social welfare and beneficial legislation
and just because of delay committed by the officers or the authorities, the
beneficiaries should not be deprived of benefits of such beneficial legislation.
Even otherwise, the delay of three years cannot be construed as an abnormal
delay and in fact there is no limitation prescribed for entertaining the writ
petition under Article 226 of the Constitution of India and therefore, the
contention of the learned counsel appearing for the second respondent with
regard to delay in filing this writ petition stands rejected.
5. Insofar as the competency of the Assistant Provident Fund
Commissioner to pass orders under Section 14B of the Act, 1952 is concerned,
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the second respondent can agitate the same before the Appellate Tribunal as
this Court is inclined to remit the matter for reconsideration of the matter.
6. In the light of the above, especially the fact that the impugned
order has been passed basing upon the decision of the Honourable Apex Court
in the case of HMT Ltd., (cited supra) and subsequently, it has been overruled
by the Apex Court in the case of Horticulture (cited supra), this Court is of
the considered view that this is a fit case, where the matter has to be
remanded back for fresh consideration by the Appellate Tribunal by duly
taking into consideration the guidelines laid down by the Full Bench of this
Court, which are extracted supra.
7. At this juncture, it is brought to the notice of this Court that
the jurisdiction to entertain the appeal against the orders passed by the
Employees' Provident Fund Appellate Tribunal under Section 14B of the Act,
1952, is now conferred upon the Central Government Industrial Tribunal-
cum-Labour Court, situated at First Floor, B-Wing, No.26 Haddows Road,
Shastri Bhawan, Chennai – 600 006.
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8. In the light of the above, the matter is remanded back to the
Central Government Industrial Tribunal-cum-Labour Court for deciding the
matter in A.T.A.No.442(13)2012 afresh by duly taking into consideration the
decision of the Honourable Apex Court in the case of Horticulture
Experiment Station (cited supra) and the guidelines laid down by the Full
Bench of this Court, which are extracted supra.
9. The Central Government Industrial Tribunal-cum-Labour Court
is further directed to dispose of the said appeal as expeditiously as possible, at
any rate, within a period of six months from the date of receipt of a copy of
this order.
10. It is open to the either side to make available the relevant
records before the Central Government Industrial Tribunal-cum-Labour Court
by reconstruction of the files, if necessary, for the expeditious disposal of the
matter as directed above.
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11. Accordingly, this writ petition is disposed of. No costs.
Consequently, connected miscellaneous petition is closed.
20.02.2025
NCC : Yes / No
Index : Yes / No
Internet : Yes / No
Note to Office: Mark a copy of this
order to the Central Government
Industrial Tribunal-cum-Labour
Court, situated at First Floor, B-Wing,
No.26 Haddows Road, Shastri
Bhawan, Chennai – 600 006.
krk
To:
The Presiding Officer,
Employee's Provident Fund
Appellate Tribunal,
Scope Minor, Core II, 4th Floor,
Lakshmi Nagar District Centre,
Lakshmi Nagar, New Delhi.
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MUMMINENI SUDHEER KUMAR, J.
krk
and
20.02.2025
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