District Project Officer, M/s Sarva Shiksha Abhiyan, Kochi v. Assistant Provident Fund Commissioner, EPFO & Enforcement Officer, EPFO

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE GOPINATH P.** **TUESDAY, THE 9[TH] DAY OF JANUARY 2024 / 19TH POUSHA, 1945** ## **WP(C) NO. 25825 OF 2018** ## **PETITIONER:** THE DISTRICT PROJECT OFFICER M/S.SARVA SHIKSHA ABHIYAN, DISTRICT PROJECT OFFICE, KARAKKATT BUILDING,CHITTOOR ROAD, COCHIN-682011. BY ADV SMT. RESHMI THOMAS - GOVERNMENT PLEADER ## **RESPONDENTS:** 1 THE ASSISTANT PROVIDENT FUND COMMISSIONER O/O THE EMPLOYEES PROVIDENT FUND ORGANISATION,SUB REGIONAL OFFICE, BHAVISHYANIDHI BHAVAN,KALOOR, KOCHI-17 2 THE ENFORCEMENT OFFICER O/O THE EMPLOYEES PROVIDENT FUND ORGANISATION,SUB REGIONAL OFFICE, BHAVISHYANIDHI BHAVAN,KALOOR, KOCHI-17 BY ADVS. DR.S.GOPAKUMARAN NAIR (SR.) SRI.S.PRASANTH, SC, EMPLOYEES PROVIDENT FUND ORGANISATION ## **OTHER PRESENT:** THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 09.01.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C)No.25825/2018 2 ## **JUDGMENT** The District Project Officer, M/s. Sarva Shiksha Abhiyan, Kochi has approached this Court challenging Ext.P8. The document marked as Ext.P8 contains two orders issued by the Assistant Provident Fund Commissioner, Kochi demanding interest under Section 7Q of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as the 'EPF Act') and also determining damages under Section 14B of the said Act. 2. The learned Government Pleader appearing for the petitioner would submit that M/s. Sarva Shiksha Abhiyan is a 100% non-profit organization and is a centrally sponsored project that was implemented in the State of Kerala from 2002 on wards. The project was aimed at improving the standard of primary education and facilitating the creation of sufficient infrastructure in primary educational institutions. In order to meet the requirement of the project, several persons were employed on contract basis as well as daily wage basis. It is submitted that the fund for the project was allocated by both the Central and State Governments and the District Project Offices were disbursing amounts including the wages paid to the employees in accordance with the budget prepared for the scheme. There were some communications issued by the State Project Officer regarding remittance of employees provident fund dues and following the same, the Project Officer, W.P.(C)No.25825/2018 3 Kochi filed an application for enrollment of employees engaged by the project under the EPF Act. By Ext.P4 dated 1.10.2010, it was determined that the provisions of the EPF Act are applicable to the employees engaged in connection with the project. By Ext.P5, it was informed that the coverage would be from 16.9.2003 and not from 20.9.2004 as previously intimated. Thereafter, proceedings were initiated for the levy of damages under Section 14B of the EPF Act and for determining the levy of interest under Section 7Q of the EPF Act. The amount to be remitted towards contribution had already been remitted by the Project Officer. By Ext.P8, it was determined that the petitioner was liable for interest under Section 7Q of the EPF Act as also to damages under Section 14B of the EPF Act. Though the petitioner chose to prefer an appeal against Ex.P8 proceedings both in respect of the interest levied under Section 7Q of the EPF Act as also in respect of levy of damages under Section 14B of the EPF Act, the said appeal was preferred beyond time and even beyond the condonable period provided under Rule 7(2) of the Tribunal Procedure Rules, 1997. It is therefore that the petitioner has approached this Court under Art.226 of the Constitution of India, challenging Ext.P8. 3. The learned Government Pleader submits that, at present, the challenge is confined to the levy of damages under Section 14B of the EPF Act. It is submitted that, as noticed in the order dated 13.8.2018 in the present writ petition, the petitioner had undertaken to pay the interest under Section W.P.(C)No.25825/2018 4 7Q of the EPF Act. It is submitted that a reading of Ext.P8 order imposing damages under Section 14B of the EPF Act does not disclose any application of mind to the relevant facts including the fact that the M/s. Sarva Shiksha Abhiyan was a centrally sponsored project intended to improve the quality of primary education in the State. It is submitted that there were no permanent employees for the project and the employees were engaged only on daily wage basis or on contract basis. It is submitted that while the petitioner did not dispute the coverage under the EPF Act, it has a case that, in the background of the peculiar facts of the case, the authority should have considered whether damages under Section 14B of the Act had to be imposed on the petitioner. 4. The learned Standing Counsel appearing for the Provident Fund Organization would contend that, in so far as the levy of interest under Section 7Q of the EPF Act is concerned, the same is statutory and no appeal would lie to the Tribunal against an order demanding interest under Section 7Q of the Act. Reference is made in this regard to the provisions of Section 7-I of the EPF Act which indicates that no appeal will lie to the Tribunal against an order determining the payment of interest under Section 7Q of the EPF Act. It is submitted that in so far as the levy of damages is concerned, there was absolutely no justifiable reason for the petitioner to have not paid the amounts due under the EPF Act on time. It is submitted that, in such circumstances, it was only appropriate that the petitioner was mulcted with liability to pay the damages under Section 14B of the EPF Act. It is submitted 5 W.P.(C)No.25825/2018 that since the petitioner had no justifiable reason, it does not lie in the mouth of the petitioner to now contend that Ext.P8 order imposing damages under Section 14B of the Act does not state the reason for imposing the damages on the petitioner. 5. Having heard the learned counsel for the petitioner and the learned Standing Counsel for the Employees Provident Fund Organization, I am of the view that there is absolutely no ground made out for interference with the order demanding interest on delayed remittance of amounts payable under the EPF Act. Going by the provisions of Section 7-I of the EPF Act, no appeal can be filed to the Tribunal against an order imposing the liability to pay interest under Section 7Q of the EPF Act. That apart, the learned Government Pleader has submitted [for the petitioner] that the challenge is now restricted to the levy of damages under Section 14B of the EPF Act. As already notice above, the documents marked as Ext.P8 are two separate orders, one imposing damages under Section 14B of the EPF and the other demanding interest for delayed payment under Section 7Q of the Act. The order imposing damages bears No.KR/KCH/27207/DAMAGES SCN/201617/vi dated 13[th] February, 2017. A perusal of the said order does not indicate that the officer had considered the necessity of imposing damages at the rate of 100%. The only reason stated by the officer is that there is _mens rea_ and therefore, the failure to remit the dues would constitute a ground to levy damages under Section 14B of the EPF Act. It is now settled with the W.P.(C)No.25825/2018 6 judgment of the Supreme Court in _**Horticulture Experiment Station Gonikoppal v. Regional Provident Fund Organization; (2022) 4 SCC 516**_ that _mens rea and/or actus reus_ is not a necessary ingredient for the imposition of damages under Section 14B of the EPF Act. However, it is necessary for the authority to determine with reference to the facts of each case as to whether damages should be imposed at the rate of 100% or at any lesser rate considering the over all facts and circumstances of the case. This is a case where the petitioner had filed a statutory appeal even beyond the condonable period before the Tribunal. While the filing of a writ petition under Art.226 of the Constitution of India cannot give any right to the petitioner to argue on all grounds raised in an appeal filed beyond time, if there are grounds made out to set aside the order in the exercise of jurisdiction under Art.226 of the Constitution of India [notwithstanding the availability of alternate remedy], the fact that the petitioner had filed an appeal before the appellate authority beyond time need not detain this Court from examining the validity of the order on limited grounds (see the judgment of the Division Bench of this Court in _**Panopharam v. Union of India; 2010(3) KLT 149** )._ Therefore I have examined the order imposing damages under Section 14B of the EPF to see whether there are any grounds made out for interference under Art.226 of the Constitution of India. As already noticed, the said order apart from stating that there is _mens rea_ does not discuss any surrounding circumstances which led to the delay in 7 W.P.(C)No.25825/2018 remittance of provident fund dues in order to determine whether damages should be levied at 100% or at any lower rate. Therefore the order No. No.KR/KCH/27207/DAMAGES SCN/2016-17/vi dated 13[th] February, 2017 forming part of Ext.P8 is set aside and the matter is remitted to the 1[st] respondent for fresh consideration, in accordance with the law. The 1[st] respondent shall redetermine the question regarding damages under Section 14B of the EPF Act, after affording an opportunity of hearing to the petitioner. I make it clear that this order is confined to the levy of damages under Section 14B of the Act and the levy of interest under Section 7Q of the EPF Act is upheld. The writ petition is disposed of as above. ## **Sd/-** **GOPINATH P. JUDGE** acd W.P.(C)No.25825/2018 8 ## **APPENDIX OF WP(C) 25825/2018** PETITIONER EXHIBITS |EXHIBIT P1|:|TRUE COPY OF THE LETTER DATED 8-4-10 ISSUED| |---|---|---| |||BY THE STATE PROJECT OFFICER,| |||THIRUVANANTHAPURAM.| |EXHIBIT P2|:|TRUE COPY OF THE LETTER DATED 10-6-10 ISSUED| |||BY THE STATE PROJECT OFFICER,| |||THIRUVANANTHAPURAM.| |EXHIBIT P3|:|TRUE COPY OF THE LETTER DATED 6-9-10| |EXHIBIT P4|:|TRUE COPY OF THE COVERAGE NOTE DATED 1-10-10| |EXHIBIT P5|:|TRUE COPY OF THE LETTER ISSUED BY THE| |||EMPLOYEES PROVIDENT FUND OFFICER, DATED 11-1-| |||2011.| |EXHIBIT P6|:|TRUE COPY OF THE CHALAN DATED 31-3-11| |EXHIBIT P7|:|TRUE COPY OF THE SUMMONS DATED 1-3-2014| |||ISSUED BY THE 1ST RESPONDENT.| |EXHIBIT P8|:|TRUE COPY OF THE PROCEEDINGS DATED 13-2-17.| |EXHIBIT P9|:|TRUE COPY OF THE APPEAL DATED 28-3-2018.|