Assistant Provident Fund Commissioner Employees' Provident Fund Organisation v Kerala Ceramics Ltd. (Clay and Mineral Division) and Central Government Industrial Tribunal cum Labour Court

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE S.V.BHATTI** ## **&** **THE HONOURABLE MR.JUSTICE BASANT BALAJI MONDAY, THE 20[TH] DAY OF FEBRUARY 2023 / 1ST PHALGUNA, 1944** **WA NO.368 OF 2023** ## **WP(C) 17738/2022 OF HIGH COURT OF KERALA** ## **APPELLANT/S:** ASSISTANT PROVIDENT FUND COMMISSIONER EMPLOYEES' PROVIDENT FUND ORGANISATION, REGIONAL OFFICE, PARAMESWAR NAGAR KOLLAM, PIN - 691001 BY ADVS.PIRAPPANCODE V.S.SUDHIR AKASH S. GIRISH KUMAR M S V.S.VARALEKSHMI DEVIKA JAYARAJ ## **RESPONDENT/S:** 1 KERALA CERAMICS LTD., CLAY AND MINERAL DIVISION, KANJIRAKODE, KUNDARA, KOLLAM, REPRESENTED BY ITS MANAGING DIRECTOR,, PIN - 691501 2 CENTRAL GOVERNMENT INDUSTRIAL TRIBUNAL CUM LABOUR COURT,8TH FLOOR, KERALA STATE HOUSING BOARD BUILDING, PANAMPILLY NAGAR, ERNAKULAM, PIN - 682016 BY ADV M. GOPIKRISHNAN NAMBIAR ## **OTHER PRESENT:** ADV. JAI MOHAN THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 20.02.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **WA NO. 368 OF 2023** -2- ## **S.V.BHATTI & BASANT BALAJI, JJ.** - - - - - - - - - - - - - - -- - - -- - - - - - - - - - -- - - - - - - - - ## **Writ Appeal No. 368 of 2023** - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - ## JUDGMENT (Dated this the 20[th] day of February 2023) ## Basant Balaji J., The appellant was the 1[st] respondent before the learned single Judge and the 1[st] respondent herein was the petitioner therein. (The parties are referred to in this appeal as arrayed in the writ petition). 2. The writ petition was filed by the petitioner to call for the records leading to Exts.P3 and P6 to the extent it levies damages at the rate of 80% of the amount assessed. **WA NO. 368 OF 2023** The petitioner is a fully owned company of the Government of Kerala engaged in the production of earthenware and spray-dried coating grade as well as filler grade kaolin for paint and paper manufacturing industries. The establishment is covered under the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (for short 'the Act'). Proceedings were initiated against the petitioner for the delay in the contribution of PF against under Sections 7Q and 14B of the Act for the period from December 2012 to July 2017, directing to appear in person and show cause why damages should not be imposed. 3. To the show cause notice, the establishment filed a statement and clarified that financial constraints was the **WA NO. 368 OF 2023** -4- major reason for not remitting the dues in time. The first respondent thereafter levied damages under Section 14B of the Act. An appeal was filed before the Tribunal. The Tribunal, by order dated 5.1.2022 in Appeal No.305/2019, modified the order and directed the petitioners to remit 80% of the damages assessed under Section 14B of the Act. Aggrieved by the order of the Tribunal, Writ Petition was filed before this court. 4. It was contended before the learned Single Judge that the petitioner company was running at loss since its inception and it is on account of the said loss that there was delay in contribution of the EPF. Though proceedings under 7Q and 14B of the Act were initiated the dues under Section 7Q of the Act has already been paid. Now **WA NO. 368 OF 2023** -5- proceedings under Section 14B of the Act alone is pending . The learned Single Judge taking note of the fact that the company is a Government owned company and that the non payment of the contribution under the Act is not wilful, reduced the quantum of damages to the extent of 50% from 80%, particularly taking note of the balance sheet of the petitioner company reflecting huge loss. The counsel for the appellant relied on a decision of the Apex Court in **Horticulture Experiment Station Gonikoppal, Coorg v. The Regional Provident Fund Organisation [(2022) 4 SCC 516]** for the proposition that any default or delay in payment of EPF contribution by the employer under the Act is _sin quo_ for imposition of levy of damages under Section 14B and that _mens rea_ or _actus reus_ is not an **WA NO. 368 OF 2023** -6- essential element for imposing penalty / damages for breach of civil obligations/ liabilities. 5. Heard Adv. Pirappancode Sudheer and Adv.M Gopikrishnan Nambiar for the parties. 6. The petitioner, a Government undertaking company, was running at loss right from the inception. Due to the accumulated loss, there was a delay in the contribution of the employees which resulted in proceedings under Section 7Q of the Act. The amount of contribution was deposited belatedly and therefore, the proceeding under sections 7Q and 14B of the Act were initiated. The petitioner company had in fact cleared the dues under section 7Q of the Act and what remains is damages under section 14B of the Act. The Tribunal found **WA NO. 368 OF 2023** -7- that the delay was not deliberate and it was due to the fact that the company was in heavy loss. Therefore, the damages was reduced to 50%. The learned Single Judge also after evaluating the balance sheet of the company and the reasons for the delay reduced the damages to 50%. 7. We are conscious of the view taken by the Apex Court in **Horticulture (Supra)** and that the learned Single Judge had exercised his discretion by reducing the quantum of damages taking note of all circumstances of the case. The hard circumstances, prevailing then for delayed deposit, are appreciated correctly by the Tribunal and the learned Single Judge. Being an intra court appeal, we are not convinced by the argument of the learned counsel for the appellant/1[st] respondent to interfere with the judgment **WA NO. 368 OF 2023** -8- of the learned Single Judge. No grounds are made out for interference and therefore, the appeal fails and it is dismissed. However, it is clarified that the observations made in the judgment and appeal shall not be treated as a binding precedent on a proposition or for that matter an issue arising on the payment of damages under the Act. **Sd/-** **S.V.BHATTI, JUDGE** **Sd/BASANT BALAJI, JUDGE** _dl/_