High Court of KeralaSingle Judge2021-12-02Writ petitions disposed of; Ext.P1 order set as...

Employees Provident Fund Organisation Sub Regional Office, Kozhikode v Parrison Estates and Industries Pvt. Ltd. and Employees Provident Fund Appellate Tribunal

Case / Petition Number:WP(C) Nos. 9299 of 2014; WP(C) Nos. 21773 of 2014

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: Bechu Kurian Thomas
Judgment Date: 2021-12-02
Court Decision / Holding: Set aside Ext.P1 orders in ATA Nos. 15(7)/2008 and 637(7)/2008; remand the matter to the Employees Provident Fund Appellate Tribunal for fresh consideration on the correctness or otherwise of the quantum of damages imposed by the original order.
Final Disposition: Writ petitions disposed of; Ext.P1 order set aside; remand to EPF Appellate Tribunal for fresh consideration on quantum.

Parties to the Case

Appellants / Petitioners

Employees Provident Fund Organisation Sub Regional Office, Kozhikode represented by the Assistant Provident Fund Commissioner (Compliance Division)

Respondents

Parrison Estates and Industries Pvt. Ltd. (owning Cherakara Estate) represented by its Director, Mr. N.K. Khalid
Employees Provident Fund Appellate Tribunal, Core 2, 4th Floor, Scope Minar, Laxmi Nagar District Centre, Delhi-110092

Legal Representation & Advocates

Counsels for Petitioners

• Sri. Thomas Mathew Nellimoottil, Senior Counsel, PF (EPFO)

Counsels for Respondents

• Sri P. Benny Thomas
• Sri M. Gopikrishnan Nambiar
• Sri P. Gopinath
• Sri K. John Mathai
• Sri Joson Manavalan
• Sri Kuriyan Thomas

Case Synopsis & Summary

These writ petitions challenge two EPF Tribunal orders in ATA 15(7)/2008 and ATA 637(7)/2008, which held that the amount imposed under Section 14B and Section 17B of the Employees Provident Fund and Miscellaneous Provisions Act, 1952, relating to the default of the previous owner, cannot be levied on a subsequent purchaser. The petitioning EPFO argues that the Supreme Court's decision in McLeod Russell India Ltd. v. Regional Provident Fund Commissioner, Jalpaiguri and Others (2014) 15 SCC 263 confirms that a subsequent purchaser may be liable for damages under Section 14B due to the predecessor's default, and that remand is necessary only to reassess quantum on merits. Respondents contend that although the decision acknowledges damages, the quantum can depend on mens rea, and that the Tribunal should re-examine the quantum on its merits, though the amount involved is small to warrant prejudice from remand. The Kerala High Court, after noting the Supreme Court authority, remands the matter for fresh consideration on the quantum, setting aside the Tribunal orders. It directs the Appellate Tribunal to reassess the correctness of the quantum imposed by the original order and disposes of the writ petitions. The decision thus clarifies liability of a successor purchaser in EPF disputes while ensuring due consideration of quantum on remand.

Provisions of Law Cited

Employees' Provident Fund and Miscellaneous Provisions Act, 1952 - Section 14BEmployees' Provident Fund and Miscellaneous Provisions Act, 1952 - Section 17BConstitution of India, Article 226

Legal Doctrines & Maxims

Mens rea as a determinant for quantum of damages under Section 14B
Liability of a subsequent purchaser for damages under Section 14B for a predecessor's default (as discussed in McLeod Russell India Ltd. v. Regional Provident Fund Commissioner)

Submissions & Arguments

Contentions of Appellants / Petitioners

The EPFO contends that the Supreme Court in McLeod Russell India Ltd. v. Regional Provident Fund Commissioner (2014) 15 SCC 263 holds that a subsequent purchaser can be liable for damages under Section 14B due to the predecessor's default. It argues that the Tribunal erred by not addressing the merits of the quantum and that, notwithstanding the pre-2004 period, remand is necessary to reconsider the quantum in light of law. The petition seeks setting aside of the Tribunal’s orders and remand for fresh adjudication on quantum.

Contentions of Respondents

The respondents acknowledge the law from McLeod Russell but argue that quantum of damages may depend on the presence or absence of mens rea. They contend the Tribunal should re-examine the quantum on merits, but given the small amount involved, remand at this stage could cause prejudice. They maintain that the question of law has already been decided, but urge fresh consideration of quantum by the Tribunal.

Cited Precedents (1)

Case Name	Citation	Treatment	Explanation
Mcleod Russell India Ltd. v. Regional Provident Fund Commissioner, Jalpaiguri and others	(2014) 15 SCC 263	Positive	Supreme Court decision cited to support liability of a subsequent purchaser for damages under Section 14B, guiding the Kerala High Court’s reasoning.

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Extracted Judgment Text

Exact text extracted from official judgment records.

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS** **THURSDAY, THE 2[ND] DAY OF DECEMBER 2021 / 11TH AGRAHAYANA, 1943** ## **WP(C) NO. 9299 OF 2014** ## **PETITIONER:** EMPLOYEES PROVIDENT FUND ORGANISATION SUB REGIONAL OFFICE, KOZHIKODE, REPRESENTED BY THE ASSISTANT PROVIDENT FUND COMMISSIONER (COMPLIANCE DIVISION). BY ADV SRI.THOMAS MATHEW NELLIMOOTTIL,SC, P.F. ## **RESPONDENTS:** 1 PARRISON ESTATES AND INDUSTRIES PVT. LTD. OWNING CHERAKARA ESTATE, REGD. OFFICE: 6/1183, CHEROOTY ROAD, KOZHIKODE-673032, REPRESENTED BY ITS DIRECTOR, MR. N.K.KHALID. 2 EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL CORE 2, 4TH FLOOR, SCOPE MINAR, LAXMI NAGAR DISTRICT, DELHI-110092. BY ADVS. SRI.P.BENNY THOMAS SRI.M.GOPIKRISHNAN NAMBIAR SRI.P.GOPINATH SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN SRI.KURYAN THOMAS THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 02.12.2021, ALONG WITH WP(C).21773/2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) Nos. 9299 of 2014 & 21773 of 2014 2 ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS THURSDAY, THE 2[ND] DAY OF DECEMBER 2021 / 11TH AGRAHAYANA,** ## **1943** ## **WP(C) NO. 21773 OF 2014** ## **PETITIONER:** EMPLOYEES PROVIDENT FUND ORGANISATION SUB REGIONAL OFFICE, KOZHIKODE, REPRESENTED BY THE ASSISTANT PROVIDENT FUND COMMISSIONER (COMPLIANCE DIVISION) BY ADV SRI.THOMAS MATHEW NELLIMOOTTIL,SC, P.F. ## **RESPONDENT:** 1 PARRISON ESTATES AND INDUSTRIES PVT. LTD. OWNING T HALAPOYA ESTATE, REGD.OFFICE:6/1183, CHEROOTTY ROAD, KOZHIKODE-673032, REPRESENTED BY ITS DIRECTOR MR.N.K.KHALID. 2 EMPLOYEES PROVIDENTY FUND APPELLATE TRIBUNAL CORE 2, 4TH FLOOR, SCOPE MINAR, LAXMI NAGAR DISTRICT CENTRE, DELHI-110092. BY ADVS. SRI.P.BENNY THOMAS SRI.M.GOPIKRISHNAN NAMBIAR SRI.P.GOPINATH SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN SRI.KURYAN THOMAS THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 02.12.2021, ALONG WITH WP(C).9299/2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) Nos. 9299 of 2014 & 21773 of 2014 3 **BECHU KURIAN THOMAS, J .............................................… W.P.(C) NOs. 9299 of 2014 & 21773 of 2014 ........................................ Dated this the 2[nd ] day of December, 2021** ## **JUDGMENT** The Employees Provident Fund Organization is the petitioner in these proceedings under Article 226 of the Constitution of India. The petitioner challenges Ext.P1 order of the Provident Fund Appellate Tribunal in ATA No.15 (7)/2008 and ATA No. 637(7) of 2008. By two separate brief orders, the Tribunal found that the amount imposed under Section 14B and 17B of the Employees Provident Fund and Miscellaneous Provisions Act 1952, (for short the Act) relating to the previous owner cannot be mulcted upon the subsequent purchaser. The impugned orders had not considered the merits of the quantum imposed as damages in the order challenged before the Tribunal. W.P.(C) Nos. 9299 of 2014 & 21773 of 2014 4 2. Sri.Thomas Mathew Nellimootil, the learned Standing counsel for the Employees Provident Fund Organization pointed out that the issue arising in these writ petitions had already been considered by the Supreme Court in _**Mcleod Russel India Ltd. v. Regional Provident Fund Commissioner, Jalpaiguri and others**_ (2014) 15 SCC 263, wherein it was held that a subsequent purchaser is also liable to pay damages under Section 14B which arose on account of the default of the previous owner. 3. The orders of the Tribunal had stated that while the claim related to a period prior to December 2004 and the appellant therein had purchased the tea estate only on 24.12.2004, appellant cannot be punished for the wrong of another. In view of the aforesaid proposition of law, it is evident that the impugned order cannot be legally sustained. 4. The learned counsel for the respondent, Sri.Gopikrishnan Nambiar submitted that, notwithstanding W.P.(C) Nos. 9299 of 2014 & 21773 of 2014 5 the aforesaid declaration of law by Supreme Court as far as the damages are concerned, the quantum of damage can be imposed, based upon the presence or absence of mens rea which is the determinative factor. It was further submitted that, since the order of the appellate authority failed to consider the correctness or otherwise of the quantum imposed by the Provident Fund Commissioner, it is a matter which is generally required to be reconsidered by the Tribunal itself, but since the amount involved is too meagre, a remand at this juncture would cause prejudice. 5. The question of law based upon the factual findings in the order under challenge has already been held to be incorrect in view of the decision in _**Mcleod Russel’s** case (supra)._ Therefore, irrespective of the quantum involved, a remand is necessary especially since, the Tribunal had not considered anything on merits of the quantum imposed. 6. Accordingly, while setting aside Ext.P1 order, in ATA No.15/2008 and ATA No.637(7)/2008, I remand the matter to the Appellate Tribunal for a fresh consideration on the 6 W.P.(C) Nos. 9299 of 2014 & 21773 of 2014 correctness or otherwise of the quantum imposed by the original order. These writ petitions are disposed of. **Sd/-** **BECHU KURIAN THOMAS JUDGE** AJM W.P.(C) Nos. 9299 of 2014 & 21773 of 2014 7 ## **APPENDIX OF WP(C) 21773/2014** ## **PETITIONER’S EXHIBITS :** P1: COPY OF THE ORDER DATED 17.01.2011 IN APPEAL ATA NO.14(7)/2008 OF THE EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL, NEW DELHI. P2: COPY OF THE APPEAL ATA 14(7)/2008. P3: COPY OF THE COUNTER AFFIDAVIT FILED ON BEHALF OF THE EPFO IN APPEAL ATA 14(7)/2008. W.P.(C) Nos. 9299 of 2014 & 21773 of 2014 8 ## **APPENDIX OF WP(C) 9299/2014** ## **PETITIONER’S EXHIBITS** : EXHIBIT P1- A TRUE COPY OF THE ORDER DATED 07-02-2011 IN APPEAL ATA NO. 15(7)/2008 OF THE EMPLYEES PROVIDENT FUND APPELLATE TRIBUNAL, NEW DELHI. EXHIBIT P2- A TRUE COPY OF APPEL ATA 15(7)/2008. EXHIBIT P3- A TRUE COPY OF THE COUNTER AFFIDAVIT FILED ON BEHALF OF THE EPFO IN APPEAL ATA 15(7)/2008. AJM //TRUE COPY // PA TO JUDGE