Indian Rare Earths Mining Area Civil Contract Workers Welfare Forum v. Employment Provident Fund Appellate Tribunal & Assistant Provident Fund Commissioner

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE N.NAGARESH** **TUESDAY ,THE 11TH DAY OF DECEMBER 2018 / 20TH AGRAHAYANA, 1940** ## **WP(C).No. 9173 of 2011** ## **PETITIONER/S:** **M/S. INDIAN RARE EARTHS MINING AREA CIVIL CONTRACT WORKERS WELFARE FORUM, CHAVARA P.O., KOLLAM - 691 583, KR/274D, REPRESENTED BY ITS, SECRETARY, H.B.LOPES.** **BY ADVS. SRI.E.K.NANDAKUMAR SRI.K.JOHN MATHAI SRI.P.BENNY THOMAS SRI.P.GOPINATH SRI.A.K.JAYASANKAR** ## **RESPONDENT/S:** **1 EMPLOYMENT 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,, OLD MUNICIPAL OFFICE BUILDING, CHINNAKKADA,, KOLLM - 691 001.** ## **COUNSEL FOR RESPONDENT-SRI.V.V.SURESH,SC FOR EPF** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 11.12.2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** WP(C).No. 9173 of 2011 2 ## **JUDGMENT** Ext.P3 order imposing a damage of Rs.68,322/- and Ext.P5 appellate order confirming the damages imposed, are challenged by the petitioner in this writ petition. 2. The petitioner is a Society constituted as a non-profit organization. The Society oversee the civil work done by its members through contractors. The Society receives the proceeds from the contractors of M/s Indian Rare Earths Limited, which is a Central Public Sector undertaking. 3. It appears from the pleadings that the 2[nd] respondent initiated proceedings against the petitioner for non remittance of dues towards Employees Provident Fund for the period from September 2005 to December 2005 and March 2006 to May 2006. The 2[nd] respondent also initiated proceedings under Section 14 B of the Employees Provident Fund and Miscellaneous Provisions Act 1952 seeking to recover damages. Ext.P1 show cause notice was issued to the petitioner seeking to levy an interest of Rs. 25,079 under Section 72 and an amount of Rs. 68,322 towards damages under Section 14 B. The petitioner submitted Ext.P2 reply, wherein WP(C).No. 9173 of 2011 3 the petitioner specifically stated that the petitioner has been established as a Charitable Organization and it is a non profit entity. The forum receives proceeds only from M/s Indian Rare Earths Limited, Chavara for engagement of its members for work. Whatever proceedings received by the petitioner are distributed to the members by way of their wages. As the petitioner is not a profit making organization, they met with some difficulties in remitting the Provident Fund dues in time during the relevant period. Taking into account the nature of the organization and their intend, steps to impose damages may be dropped, prayed the petitioner. 4. The 1[st] respondent however proceeded to pass Ext.P3 order, ordering that the petitioner Forum is liable to pay Rs.68,322/towards damages for non payment of PF dues for the period from 09/05 to 11/05, 3/06 and 5/06. 5. Aggrieved by Ext.P3 order of the 1[st] respondent the petitioner filed Ext.P4 appeal before the Employees Provident Fund Appellate Tribunal, New Delhi. In their appeal also, the petitioner explained the nature of their establishment and the circumstances under which there occurred default in the matter of payment of PF dues during a short period. The petitioner Forum specifically WP(C).No. 9173 of 2011 4 contended before the Tribunal that otherwise they have been prompt in payment of PF dues but the non remittance during the relevant period occurred due to the financial constraints met with by the petitioner during the relevant time. The Tribunal however, on a mechanical approach to the appeal held that, financial up and down is a common feature in every establishment and financial constraints cannot be a valid reason not to impose damages. Accordingly the 1[st] respondent Tribunal rejected the appeal filed by the petitioner confirming Ext.P3 order of the 1[st] respondent. 6. The learned counsel for the petitioner submitted that the petitioner has been prompt and regular in the matter of payment of PF dues in respect of his workers. The petitioner is a non profitable organization working on a charitable basis for the benefit of its members, who are working on various contract works. Whatever little profit earned by the Forum are distributed among these workers towards wages. The respondents have a duty to consider whether there was intentional default in making remittance to Provident Fund. In the absence of mens rea damages cannot be imposed, contended the counsel for the petitioner. 7. On the other hand the Standing Counsel for the WP(C).No. 9173 of 2011 5 respondents oppose the writ petition and argues that the petitioner had failed to make the remittance intentionally and deliberately. This is evident from the fact that in spite of notice is issued, the petitioner did not make remittance. Financial difficulties of an employer cannot be a reason for non payment of PF dues. If financial difficulties cannot be a reason for non payment of PF dues then the same cannot be a reason not to impose damages also. Whatever be the nature of constitution of the petitioner Forum, the petitioner's Forum is an employer and bound to remit workers contribution towards Provident Fund. The learned counsel for the respondents further contended that the Tribunal has properly considered the appeal filed by the petitioner and dismissed the appeal for good and sufficient reasons. There is no grounds warranting interference with the impugned orders by this Court. 8. I have considered the arguments raised by the counsel for the petitioner and the respondents. It is not in dispute that the petitioner is a Charitable Society registered for the welfare of workers. It is also a case where the petitioner Forum has been remitting the Provident Fund dues in respect of its members promptly. This is not a case where there is allegation of Non WP(C).No. 9173 of 2011 6 Enrollment of Workers. All the workers have been enrolled in the Provident Fund and the petitioner Forum has been making regular contributions as per the statute. But there occured failure to make payment in respect of two spells of short periods. Going by the history of payments made by the petitioner, the non payment of PF dues for the periods in question cannot be considered as deliberate. 9. A Division Bench of this Court has considered the issue of discretion of Authorities in the matter of imposing damages, in _**Regional Provident Fund Commissioner v. Harrisons Malayalam Ltd** [2013 (3) KLT 790]._ After considering the judgments of the Apex Court in a number of decisions cited therein, the Division Bench of this Court came to the conclusion that under Section 14-B, the Authorized Officer necessarily has a discretion to impose damages, by way of penalty or not to impose it altogether. The Division Bench held that the Officer has to exercise his discretion while looking at the mitigating circumstances, which includes financial difficulties of the employer and the quantum to be imposed. In the present case, going by Ext.P3 and P5 orders it is clear that such discretion has not been exercised by the authorities at all. WP(C).No. 9173 of 2011 7 The Apex Court has held in its Judgment in _**Assistant Provident Fund Commissioner, EPFO and Another v. The Management of RST Textiles India Pvt. Ltd**_ in Civil Appeal No. 96-97 of 2017 dated 03.01.02017 that presence and absence of mens rea and/or actus reus would be determinative factor in imposing damages under Section 14B. The Apex Court also referred to its earlier judgment in _**Mcleod Russel India Ltd v. Regional Provident Fund Commissioner, Jalpaiguri and Others**_ to arrive at the conclusion that intention is an important factor in the matter of award of damages. The Overall conduct of the petitioner in this writ petition does not disclose a deliberate refusal in the matter of payment of PF dues. Therefore, in the facts and circumstances of the case I am of the opinion that this writ petition has to be allowed. Accordingly the impugned Exts.P3 and P5 orders are set aside. The writ petition is allowed accordingly. ## **Sd/-** ## **N.NAGARESH** ## **JUDGE** sree WP(C).No. 9173 of 2011 8 ## **APPENDIX** ## **PETITIONER'S/S EXHIBITS:** ## **EXHIBIT P1** **TRUE COPY OF THE NOTICE DATED 14/5/2008 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER** - **EXHIBIT P2 TRUE COPY OF THE REPLY DATED 28/5/2008 SUBMITTED BY THE PETITIONER BEFORE THE 2ND RESPONDENT.** - **EXHIBIT P3 TRUE COPY OF THE ORDER DATED 5/6/2008 PASSED BY THE 2ND RESPONDENT.** - **EXHIBIT P4 TRUE COPY OF THE APPEAL PETITION A.T.A.NO.564(7)/2008. (WITHOUT ITS ANNEXURES) DATED 4.8.2008 FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT.** **EXHIBIT P5 TRUE COPY OF THE ORDER PASSED BY THE FIRST RESPONDENT DATED 12/1/2011 IN ATA NO. 564(7)/2008.** ## **RESPONDENT'S/S EXHIBITS:NIL** **//TRUE COPY//** **Sd/-** **PA TO JUDGE**