Dipesh S. Ved v Union of India; Employees Provident Fund Organisation v Rajgopal Textile Mills Pvt. Ltd.

## **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ## **`THE HONOURABLE MR. JUSTICE AMIT RAWAL`** ``` MONDAY, THE 20[TH] DAY OF MARCH 2023 / 29TH PHALGUNA, 1944 ``` ## **`WP(C) NO. 26205 OF 2012`** ## **`PETITIONER:`** ``` DIPESH.S.VED., AGED 36 YEARS, S/O.SANTHIKUMAR G.VED, FLAT NO 4, 30/508, BHAGAVATHY APARTMENT, M/S.RAJAGOPAL TEXTILES MILLS(P) LTD SHORNUR ROAD THRISSUR 680581 ``` ``` BY ADV SRI.PRAVEEN K. JOY ``` ## **`RESPONDENTS:`** ``` 1UNION OF INDIA, REPRESENTED BY SECRETARY, MINISTRY OF LABOUR, NEW DELHI 110001 ``` - `2 THE REGIONAL PROVIDENT FUND COMMISSIONER, BHAVISHYA NIDHI BHAVAN, KALOOR, KOCHI 17` ``` 3THE ASSISTANT P.F COMMISSIONER(DAMAGES) AND RECOVERY OFFICER, EMPLOYEES PROVIDENT FUND ORGANISATION, MINISTRY OF LABOUR, KALOOR, KOCHI 17 ``` ``` BY ADVS. SRI.S.PRASANTH, SC, EPFO SRI.P.MURALEEDHARAN, CGC DR.S.GOPAKUMARAN NAIR (SR.) ``` ``` THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 20.03.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` WP(C).26205/12 & 26863/12 ``` ``` -2- ``` # **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** # **`PRESENT`** ``` THE HONOURABLE MR. JUSTICE AMIT RAWAL MONDAY, THE 20[TH] DAY OF MARCH 2023 / 29TH PHALGUNA, 1944 WP(C) NO. 26863 OF 2012 ``` ## **`PETITIONER:`** ``` EMPLOYEES PROVIDENT FUND ORGANISATION, REPRESENTED BY ASSISTANT PROVIDENT FUND COMMISSIONER, SUB-REGIONAL OFFICE, BHAVISHYANIDHI BHAVAN, P.B.NO.1895, KALOOR, COCHIN-682 017. ``` ``` BY ADVS. DR.S.GOPAKUMARAN NAIR (SR.) SRI.A.RAJASIMHAN ``` ## **`RESPONDENTS:`** ``` 1RAJGOPAL TEXTILE MILLS PVT. LTD. MULANKUNNATHUKAVU POST, TRICHUR -680 581. ``` ``` 2EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL (MINISTRY OF LABOUR AND EMPLOYMENT, GOVERNMENT OF INDIA) 4TH FLOOR, CORE 2, SCOPE MINAR, LAXMI NAGAR DELHI - 110 092. ``` ``` BY ADV. SRI.S.PRASANTH, SC, EPFO SRI.PRAVEEN K. JOY ``` ``` THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 20.03.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` WP(C).26205/12 & 26863/12-3- ``` ## **`JUDGMENT`** This order of mine shall dispose of two writ petitions. W.P.(C) No.26205 of 2012 titled as Dipesh S.Ved Vs. Union of India (first writ petition), has been filed seeking writ of mandamus for issuance of No Objection Certificate regarding release of the properties of M/s Rajgopal Textiles from attachment. W.P.(C) No.26863 of 2012 (second writ petition) has been preferred by the Employees Provident Fund Organisation against the order of the EPF Appellate Tribunal dated 02.02.2010. On account of noncontribution by management M/s.Rajgopal Textiles, proceedings under Section 7A of the Employees’ Provident Fund & Miscellaneous Provisions Act, 1952 (hereinafter referred to as ‘the Act’, for short) were initiated. The management was given option to make the payment in instalments. As a fall out of the aforementioned default in the contribution and the order under Section 7A, proceedings under Section 14B and ``` WP(C).26205/12 & 26863/12-4- ``` 7Q of the Act were initiated. Assessing Authority assessed the damages to the tune of Rs.84,91,179/(Rupees Eighty four lakh ninety one thousand one hundred and seventy nine only). The said order was appealed before the Appellate Tribunal and vide order dated 02.02.2010 as noticed above, amount has been reduced to 10%. 2. Learned counsel representing the petitioner in the first writ petition submitted that owing to the nonpayment of the arrears assessed by way of damages and under Section 7Q, request was sent to the concerned department for issuance of the attachment of the property for realising the dues. 3. After passing the order EPF Organization vide communication dated 7.9.2012 accepted the order and given the option to the petitioner to deposit 10% of the amount as assessed by the Appellate Tribunal. The said amount of Rs.46,05,941/- (Rupees Fourty six lakh five thousand nine hundred and forty one only) vide demand ``` WP(C).26205/12 & 26863/12-5- ``` draft dated 11.09.2012 was deposited along with an amount of Rs.35,92,133/- (Rupees Thirty five lakh ninety two thousand one hundred and thirty three only) towards interest under Section 7Q of the Act and Rs.30,000/- (Rupees Thirty thousand only) towards the cost of the recovery. Thereafter in the month of November, 2012 challenged the order on the ground that paragraph 32A of the EPF Scheme, 1952 was erroneously noticed by the Tribunal as it became effective with effect from 26.09.2008 whereas the default in the instant case was of March 2003 to 2008. There was no mens rea on the part of the petitioner in not depositing the contribution but owing to the loss as there was a sudden down-fall in the cotton yarn industry. This Court also vide order dated 29.01.2013 directed the Regional Provident Fund Commissioner, Kaloor and Recovery Officer for issuing the No Objection Certificate (NOC) on furnishing a bank guarantee for the balance amount i.e., Rs.38,85,238/- (Rupees Thirty eight lakh eighty five thousand two hundred and thirty eight only). ``` WP(C).26205/12 & 26863/12-6- ``` Petitioner executed a guarantee and No Objection Certificate was issued. EPF Organization cannot be permitted to approbate and reprobate by accepting the order as they are estopped to challenge the same after having agreed to give an option. Petitioner deposited the amount even if they reserved the right. Writ petition, thereafter, was filed after expiry of two months thereafter. 4. On the other hand, learned counsel for the EPF contended that Paragraph 32A would not be applicable for it became effective only in July, 2008. As per the judgment reported by the hon’ble Supreme Court in **Horticulture Experiment Station Gonikoppal, coorg** v. **The Regional Provident Fund Organization [2022 LiveLaw SC 202, Civil Appeal No.2136 of 2012],** it has been held that once there is in default on the part of the party in not making contributions, penal provisions cannot be interdicted or waived off. Management failed to place on record any material to substantiate the financial losses. ``` WP(C).26205/12 & 26863/12-7- ``` 5. I have heard learned counsel for the parties and appraised the paper books. 6. The factum of initiation of the proceedings under Section 7A of the Act and the determination of the amount and payment thereof in instalment is not disputed. Provisions of Section 14B and 7Q of the Act are inevitable provisions. Legislature has provided penal provisions like Section 14B and 7Q of the Act where the parties have been found to be in remiss or faultered in not depositing the contribution in time. The damages in the present case were assessed to the tune of Rs.84,91,179/- (Rupees Eighty four lakh ninety one thousand one hundred and seventy nine only). The question arises is whether the EPF after having given an option to the management vide communication dated 07.09.2012, Ext.P2 in the first writ petition, even while reserving the rights to challenge the same, can be permitted to assail the non-applicability of the provisions. Ext.P2 dated 07.09.2012 in the first writ petition is extracted hereinbelow: ``` WP(C).26205/12 & 26863/12 ``` ``` -8- ``` “EMPLOYEES PROVIDENT FUND ORGANISATION (Ministry of Labour, Government of India) SUB REGIONAL OFFICE, BHAVISHYANIDHI BHAVAN KALOOR, KOCHI – 682 017 (Kerala) Ph-2341569, 2341599 Fax:2338410 __________________________________________________________ NO:KR/KCH/11/DAMAGES CELL/2012 ## DATE:07.09.2012 TO, THE MANAGING DIRECTOR, M/S.RAJGOPAL TEXTILE MILLS (P) LTD, MULAKUNNATHUKAVU P.O. THRISSUR – 680581 Sub: Payment of Interest and damages for the belated remittances under section 7Q and 14B of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 for the period – 03/2003 to 10/2008 regarding Ref: EPF Appellate Tribunal, New Delhi Order dated 05/03/2012 in Appeal No.ATA No.294(7)2010 2.Your letter dated 12.03.2012 Sir, Please refer the above. EPF Appellate Tribunal, New Delhi vide order dated 05/03/2012 in appeal No.ATA No.294(7)2010 restricted the damages up to 10% per annum on the arrears of the contribution. As per above order the Damages recalculated and revised as under at the rate of ``` WP(C).26205/12 & 26863/12-9- ``` 10% per annum on the arrears of the contribution for the period 03/2003 to 10/2008, notwithstanding our right to appeal against the order of Hon’ble Tribunal reducing the damages to 10%. ## DAMAGES AS REVISED |A/c.Nos.|AMOUNT| |---|---| |I|Rs.2773707/-| |II|Rs.267626/-| |X|Rs.1444912/-| |XXI|Rs.117389/-| |XXII|Rs.2307/-| |TOTAL|Rs.4605941/-| (Rupees Fourty six lakhs five thousand nine hundred fourty one only) Hence you are requested to remit the above at the earliest and submit copy of challan to this office. (Authority : RPFC’s order dated 30.07.2012) Yours faithfully Sd/(S.GOVINDAN) Assistant P.F.Commissioner, (Damages)” 7. The Tribunal did not notice that in the absence of mens rea damages were liable to be reduced. ``` WP(C).26205/12 & 26863/12-10- ``` Thus the ratio culled out in the judgment would not be applicable. Once the amount aforementioned had been deposited and NOC has also been issued subject to furnishing of the Bank Guarantee viz-a-viz the balance amount, I am of the view that the procedure of law cannot be misused for assuaging the law. For the reason aforementioned W.P.(C) No.26863 of 2012 is dismissed. NOC has already been issued, it would not be subject to furnishing of the bank guarantee. Bank guarantee already furnished and kept alive is ordered to be closed. W.P.(C) No.26205 of 2012 is disposed off. ``` Sd/- AMIT RAWAL JUDGE ``` ``` vv ``` ``` WP(C).26205/12 & 26863/12-11- ``` ## **`APPENDIX OF WP(C) 26205/2012`** ## **`PETITIONER EXHIBITS`** |`EXHIBIT P1`|||| |---|---|---|---| ||`TRUE`|`PHOTOSTAT COPY OF THE ORDER DATED`|| ||`05.03.2012 OF EMPLOYEES PROVIDENT`||| ||`FUND,`||| |`EXHIBIT P2`|||| ||`TRUE `|`PHOTOSTAT COPY OF THE LETTER`|| ||`DATED`|`07.09.2012 OF 3RD RESPONDENT.`|| |`EXHIBIT P3`|||| ||`TRUE`|`PHOTOSTAT COPY OF THE DD DATED`|| ||`11.09.2012`||| |`EXHIBIT P4`|||| ||`TRUE `|`PHOTOSTAT COPY OF THE LETTER`|| ||`DATED`|`11.09.2012`<br>`TO`<br>`THE`|`2ND`| ||`RESPONDENT.`||| |`EXHIBIT P5`|||| ||`TRUE`|`PHOTOSTAT COPY OF LETTER DATED`|| ||`11.09.2012 TO THE 2ND RESPONDENT.`||| |`EXHIBIT P6`|||| ||`TRUE `|`PHOTOSTAT COPY OF DD DATED`|| ||`12.09.2012.`||| |`EXHIBIT P7`|||| ||`TRUE `|`PHOTOSTAT COPY OF DD DATED`|| ||`12.09.2012.`||| |`EXHIBIT P8`|||| ||`TRUE `|`PHOTOSTAT COPY OF DD DATED`|| ||`12.09.2012.`||| |`EXHIBIT P9`|||| ||`TRUE`|`PHOTOSTAT COPY OF LETTER DATED`|| ||`11.309.2012`||| |`EXHIBIT P10`|||| ||`TRUE`|`PHOTOSTAT COPY OF THE APPLICATION`|| ||`DATED`|`25.09.2012`|| |`EXHIBIT P11`|||| ||`TRUE `|`PHOTOSTAT COPY OF THE LETTER`|| ||`DATED`|`15.10.2012`|| |`EXHIBIT P12`|||| ||`TRUE`|`PHOTOCOPY OF THE BANK GUARANTEE`|| ||`DATED`|`12.02.2013 OF HDFC BANK`|| ``` WP(C).26205/12 & 26863/12-12- ``` ## **`RESPONDENT’S EXHIBITS`** ``` ANNEXURE R2(A) ``` ``` TRUE COPY OF CP I NOTICE DATED 12-5- 2010 ``` ``` ANNEXURE R2(B) ``` ``` TRUE COPY OF ACKNOWLEDGEMENT ``` ``` WP(C).26205/12 & 26863/12-13- ``` ## **`APPENDIX OF WP(C) 26863/2012`** ## **`PETITIONER EXHIBITS`** - `EXHIBIT P1 THE TRUE COPY OF THE PROCEEDINGS DATED 29.3.2010 ISSUED UNDER SECTION 14B OF THE EPF & MP ACT, 1952.` - `EXHIBIT P2 THE TRUE COPY OF THE APPEAL NO ATA 294 (7) 2010` - `EXHIBIT P3 THE TRUE COPY OF THE EPF APPELLATE TRIBUNAL’S ORDER DATED 5.3.2012` - `EXHIBIT P4 TRUE COPY OF THE EPF APPELLATE TRIBUNAL’S ORDER IN ATA NO.700(7) 2002 DATED 2.2.2010.` ## **`RESPONDENT’S EXHIBITS`** - `EXHIBIT R1(A) TRUE PHOTOSTAT COPY OF THE LETTER DATED 07.09.2012 OF 3RD RESPONDENT` - `EXHIBIT R1(B) TRUE PHOTOSTAT COPY OF THE DD DATED 11.09.2012` - `EXHIBIT R1(C) TRUE PHOTOSTAT COPY OF THE LETTER DATED 11.09.2012` - `EXHIBIT R1(D) TRUE PHOTOSTAT COPY OF THE LETTER DATED 11.09.2012` - `EXHIBIT R1(E) TRUE PHOTOSTAT COPY OF DD DATED 12.09.2012` - `EXHIBIT R1(F) TRUE PHOTOSTAT COPY OF DD DATED 12.09.2012` - `EXHIBIT R1(G) TRUE PHOTOSTAT COPY OF DD DATED 12.09.2012` ``` EXHIBIT R1(H)TRUE PHOTOSTAT COPY OF THE LETTER DATED 11.09.2012 EXHIBIT R1(I)TRUE PHOTOSTAT COPY OF THE APPLICATION ``` ``` WP(C).26205/12 & 26863/12-14- ``` ``` DATED 25.09.2012 ``` ``` EXHIBIT R1(J)TRUE PHOTOSTAT COPY OF THE LETTER DATED 15.10.2012 ```