BPL Limited v Employees Provident Fund Appellate Tribunal & Assistant Provident Fund Commissioner

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON** ## **THURSDAY, THE 31ST DAY OF JULY 2014/9TH SRAVANA, 1936** **WP(C).No. 7685 of 2011 (I) ---------------------------** ## **PETITIONER(S):** **--------------------------** **BPL LIMITED 11TH KM, BANNERGHATTA ROAD, AREKERE BANGALORE-560 076, KARNATAKA, REPRESENTED BY ITS DEPUTY GENERAL MANAGER - ACCOUNTS MR. B.OONNY KRISHNA KURUP.** **BY ADVS.SRI.E.K.NANDAKUMAR SRI.A.K.JAYASANKAR NAMBIAR SRI.K.JOHN MATHAI SRI.P.BENNY THOMAS SRI.P.GOPINATH MENON** ## **RESPONDENT(S):** **----------------------------** **1. EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL SCOPE MINAR, CORE II 4TH FLOOR, LAXMI NAGAR DISTRICT CENTRE, LAXMI NAGAR NEW DELHI-110 092.** **2. THE ASSISTANT PROVIDENT FUND COMMISSIONER, EMPLOYEES PROVIDENT FUND ORGANISATION SUB REGIONAL OFFICE, BHAVISHYANIDHI BHAVAN P.B.NO.1806, KOZHIKODE-673 006, KERALA.** ## **R1 & R2 BYSRI.THOMAS MATHEW NELLIMOOTTIL,SC, P.F.** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 31-07-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **WP(C).No. 7685 of 2011** ## **APPENDIX** ## **PETITIONERS EXHIBITS:** **EXT.P1: COPY OF THE NOTICE DATED 5.11.2004 ISSUED BY THE 2ND RESPONDENT.** **EXT.P2:COPY OF THE REPLY DATED 04.1.05 SUBMITTED BY THE PETITIONER BEFORE THE 2ND RESPONDENT.** ## **EXT.P3:COPY OF THE ORDER DATED 3.3.05 PASSED BY THE 2ND RESPONDENT.** **EXT.P4:COPY OF THE APPEAL PETITION ATA NO.450(7)2005 (WITHOUT ITS ANNEXURES)** **EXT.P5:COPY OF THE ORDER OF THE TRIBUNAL DATED 6.12.2010 IN ATA NO.450 (7) 2005.** **EXT.P6:COPY OF THE ORDER PASSED BY THE 1ST RESPONDENT IN ATA NO.909(7) 2005, DATED 2.2.2011.** ## **RESPONDENTS EXHIBITS: NIL** **/TRUE COPY/** **P.A. TO JUDGE SKV** ## **P.R. RAMACHANDRA MENON, J.** .............................................................................. ## **W.P.(C)No.7685 OF 2011** ......................................................................... **Dated this the 31[st] July, 2014** ## **J U D G M E N T** Correctness and sustainability of Ext.P3 order passed by he second respondent/Assistant Provident Fund Commissioner imposing damages under Section 14B of the _Employees' Provident Funds and Miscellaneous Provisions Act, 1952_ (herein after referred to as the 'Act') upon the petitioner, which stands confirmed as per Ext.P5 order passed by the first respondent/Employees Provident Fund Appellate Tribunal, is under challenge in this writ petition. 2. Petitioner Company is a Public Limited Company registered under the Companies Act, 1956 and is engaged in the manufacture of electronic components, medical equipments etc. Petitioner's establishment is covered under the relevant provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952. It is stated that till the year 2003, the petitioner/Company was effecting proper contributions to the Fund without fail. But because of adverse marketing conditions and labour unrest and such other reasons, the Company fell in doldrums and was not in a position to satisfy the requirements **2** ## **W.P.(C)No.7685 OF 2011** under the Statute on time. However, taking much pains, payments were effected, though belatedly. Observing that there was delay in satisfying the due amount on time, the petitioner was served with Ext.P1 notice demanding damages to the tune of Rs.28,44,710/-under Section 14B of the Act. The petitioner submitted Ext.P2 reply, pointing out the hardships and adverse circumstances, referring to the plight of the Company during the relevant period; thus highlighting the circumstances how the delay was resulted. However, without giving due regard to the reply, Ext.P3 order came to be passed by the second respondent/Assistant Provident Fund Commissioner on 03.03.2005, whereby 100% damages was imposed, requiring the petitioner to satisfy the due amount as specified. Met with the circumstance, the petitioner preferred Ext.P4 appeal before the first respondent/Tribunal. Considering the facts and circumstances, the petitioner was granted interim stay; subject to satisfaction of 50% of the requisite damages, which is stated as complied with. The appeal was finally heard by the first respondent/Tribunal, who passed Ext.P5 order dated 06.12.2010 dismissing the appeal as devoid of any merit, which **3** ## **W.P.(C)No.7685 OF 2011** in turn is under challenge in this writ petition. 3. A counter affidavit has been filed on behalf of the second respondent seeking to sustain the course and proceedings. 4. Heard both sides in detail. 5. During the course of hearing, the learned Counsel for the petitioner submits that the course pursued by both the respondents herein, i.e. the Original Authority as well as the Appellate Authority are under a wrong impression that payment of damages under Section 14B of the Act is automatic, which is not so, and that the matter has to be considered depending upon all the relevant facts, including the mitigating pecuniary circumstances in view of the law declared by the Apex Court as well as by this Court on the point. Reliance is sought to be placed on the recent decision in _**Regional Provident Fund Commissioner vs. Harrisons Malayalam Ltd**_ **(2013(3) KLT 790)** and also another decision rendered by learned Judge of this Court in the petitioner's case, in respect of another contribution period; substantially scaling down the liability towards damages by judgment dated 20.02.2013 in W.P.(C) 7698 of 2011. The learned Counsel also points out that, Ext.P6 is an order dated **4** ## **W.P.(C)No.7685 OF 2011** 02.02.2011 passed by the first respondent/Tribunal in respect of yet another period whereby the case put forth by the petitioner Company as to the frustrating circumstances under which the delay in effecting payment was occurred, was accepted and the penalty was substantially scaled down. It is also pointed out that, this vital aspect could not be brought to the notice of the first respondent, for the plain reason that an opportunity of hearing was virtually denied to the petitioner, in so far as the posting with regard to the hearing scheduled on 06.12.2010 was never let known to the petitioner and no notice was issued to the petitioner at any point of time as pleaded in paragraph 7 of the writ petition. 6. The learned Standing Counsel for the second respondent submits that, by virtue of the provisions of the Act and Scheme, particularly paragraph 32 A of the EPF Scheme, damages have to be realised at the rates as specified therein and that there is no discretion to the second respondent/Provident Fund Commissioner to take any deviation, either to reduce or modify or waive the same in any manner. It is stated that the power to reduce or waive the damages is vested with the Central Board **5** ## **W.P.(C)No.7685 OF 2011** of Trustees and not with any other authority. It is contended that in so far as default on the part of the petitioner is conceded and the belated payment stands established in respect of the disputed period, the petitioner is liable to be mulcted with damages contemplated under Section 14B r/w paragraph 32A of the EPF Scheme . 7. After hearing both the sides and on going through the pleadings and proceedings, it is seen that the first respondent/Appellate Authority has observed in Ext.P5 order that no argument was advanced by the appellant, which led to taking of the matter for orders after hearing the respondents. But there is no mention anywhere in Ext.P5, as to the issuance of notice of hearing to the petitioner. The specific pleading raised by the petitioner in paragraph '7' of the writ petition as to the non issuance of any such notice stands unrebutted. After referring to the various binding judicial precedents , legal position has been made clear by a Division Bench of this Court as per the decision in _**Regional Provident Fund Commissioner vs. Harrisons Malayalam Ltd**_ **(2013(3) KLT 790)** that, imposition of damages under Section 14B of the Act is not automatic and that **6** ## **W.P.(C)No.7685 OF 2011** the idea and understanding of the Department/competent authority with regard to quantum of damages to be imposed is quite wrong and misconceived. It has been categorically made clear that the adjudicatory authority under an enactment, be it a welfare legislation or otherwise, is not supposed to stand in the shoes of a 'recovery officer' and has to deal with the issue with proper application of mind; alerting that 'financial constraint' is also a relevant factor while considering the quantum of damages to be imposed under Section 14B, though it is totally irrelevant with regard to payment of 'interest' under Section7Q of the Act. This Court finds considerable force in the said submission raised from the part of the petitioner with reference to the verdict passed by this Court cited supra. . 8. Ext.P6 order passed by the first respondent/Tribunal substantially scaling down the liability towards damages under section 14B of the Act, thus modifying the order in respect of the subsequent period (where there occurred belated payment from the part of the very same petitioner), is very relevant to be looked into. No helplessness has been expressed from the part of the respondents while dealing with the issue and on arriving **7** ## **W.P.(C)No.7685 OF 2011** at a finding as to the necessity to have reduced the liability towards damages in respect of such period. The financial instability and the reason for delay in having effected payment have been virtually accepted by the first respondent while passing Ext.P6. That apart, another learned Judge of this Court has considered the issue in respect of yet another contribution period of the very same petitioner, in W.P.(C)7698 of 2011 and as per the judgment dated 20.02.2013, interference was made and the liability towards damages under Section 14B was brought down to considerable extent. In the said circumstance, this Court finds that the petitioner is entitled to have some relief in view of the undisputed facts and events with regard to the compelling circumstances under which payment came to be effected belatedly. 9. After considering the course pursued by the first respondent vide Ext.P6 order passed in respect of the petitioner in relation to another contribution period and the course adopted by this Court in W.P.(C)7698 of 2011 in respect of similar contribution period, this Court finds that satisfaction of 50% of the disputed liability stated as already effected by the petitioner **8** ## **W.P.(C)No.7685 OF 2011** for availing the benefit of interim stay, during pendency of the appeal, will be adequate enough, to be the damages payable under Section 14B. Having effected payment to the said extent, no further payment needs to be realised from the petitioner towards damages under Section 14B. It is made clear that, since there is no dispute with regard to the amount payable towards interest under Section 7Q, which even otherwise is statutory, the benefit now granted as per this judgment is only in respect of damages under Section 14B and that alone. With the above observation, the writ petition is disposed of. ## **P.R.RAMACHANDRA MENON JUDGE** _lk_