KERALA STATE CASHEW WORKERS APEX INDUSTRIAL CO-OPERATIVE SOCIETY LTD. (CAPEX) vs THE ASSISTANT PROVIDENT FUND COMMISSIONER

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** ## **THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE** **FRIDAY, THE 20TH DAY OF DECEMBER 2013/29TH AGRAHAYANA, 1935** ## **WP(C).No. 15187 of 2013 (W)** **----------------------------** **PETITIONER:-** **--------------------------** **KERALA STATE CASHEW WORKERS APEX INDUSTRIAL, CO-OPERATIVE SOCIETY LTD (CAPEX), P.B.NO.262, KOLLAM - 691 001, REP. BY ITS MANAGING DIRECTOR.** **BY ADVS.SRI.BRIJESH MOHAN SMT.RESMI G. NAIR** **RESPONDENT:-** **-----------------------** **THE ASSISTANT PROVIDENT FUND COMMISSIONER, AND RECOVERY OFFICER, EMPLOYEES PROVIDENT FUND ORGANIZATION, SUB REGIONAL OFFICE, BHAVISHYANIDHI BHAVAN, KALOOR, KOCHI - 682 017.** **BY ADVS. DR.S.GOPAKUMARAN NAIR (SR.) SRI.A.RAJASIMHAN,SC,EPF ORGANISATION** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 3.9.2013, THE COURT ON 20-12-2013, DELIVERED THE FOLLOWING:-** **KKS** ## **WP(C).No. 15187 of 2013 (W) ----------------------------------------** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS:-------------------------------------** **EXHIBIT P1: COPY OF THE NOTICES NO.KR/TVM/CIRCLE: 17/DAMAGES /KR / 2546/ CA/ DATED 06/12/2006 IN REPORT OF CHATHINAMKULAM CO- OPERATIVE SOCIETY LTD.CAPEX,PERUMPUZHA, CHATHANNUR CASHEW WORKERS CO-OPERATIVE SOCIETY LTD., KARAMCODE, KERALA STATE CASHEW WORKERS APEX INDUSTRIAL CO-OPERATIVE SOCIETY LTD., KILIKOLLOOR, PERINAD CASHEW INDUSTRIAL CO-OPERATIVE SOCIETY LTD., CHAMMAKKAD AND CAPEX, BEACH ROAD KOLLAM.** **EXHIBIT P2: COPY OF THE ORDER NO.KR/KC/1263/PD/B/T (1) /2007 DATED 24/09/2007 ISSUED BY THE RESPONDENT. EXHIBIT P3: COPY OF THE ORDER NO.KR/KC/1263/ DAMAGES CELL /7Q// T (1) / 2007 DATED 24/9/2007 ISSUED BY THE RESPONDENT.** **EXHIBIT P4: COPY OF THE ORDER NO.KR/KC/1252/PD/B/ 7(1) / 2007 DATED 24/9/2007 ISSUED BY THE RESPONDENT.** **EXHIBIT P5: COPY OF THE NOTICE NO.KR/KLM/CIRCLE: 17/DAMAGES/ KR/2560/ CA DATED 12/6/2008 ISSUED BY THE RESPONDENT.** **EXHIBIT P6: COPY OF LETTER NO.CAPEX/G2/1252/1263/8 DATED 23/7/2008 SUBMITTED BY THE PETITIONER TO THE RESPONDENT.** **EXHIBIT P7: COPY OF THE NOTICE NO.KR/KC/1252/RECOVERY/ 2008-09 DATED 28/8/2008 ISSUED BY THE RESPONDENT TO THE PETITIONER.** **EXHIBIT P8: COPY OF APPEAL DATED 1/7/2009 PREFERRED BY THE PETITIONER BEFORE THE EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL UNDER SECTION 7-1 OF THE P.F.ACT. EXHIBIT P9: COPY OF THE JUDGMENT OF THIS HON'BLE COURT DATED 8/10/2009 IN WPC NO.24834/2009.** **EXHIBIT P10: COPY OF THE ORDER DATED 14/11/2012 IN ATA NO.427(7)/2009 PASSED BY THE PROVIDENT FUND APPELLATE TRIBUNAL. EXHIBIT P11: COPY OF WARRANT OF ATTACHMENT NO. KR/KC/1263/RECOVERY/ 2013 DATED 16.3.2013 ISSUED BY THE RESPONDENT.** **RESPONDENT(S)' EXHIBITS:- NIL -----------------------------------------** ## **//TRUE COPY//** **P.S TO JUDGE** **KKS** ## **A.M.SHAFFIQUE, J * * * * * * * * * * * * *** W.P.C.No.15187 of 2013 ---------------------------------------- Dated this the 20[th] day of December 2013 ## **J U D G M E N T** The petitioner, the Kerala State Cashew Workers Apex Industrial Co-operative Society Ltd. challenges the proceedings taken by the Employees Provident Fund Organisation invoking the powers under the Employees Provident Fund and Miscellaneous Provisions Act 1952 (hereinafter referred to as ‘the Act’). 2. The proceedings related to payment of damages under Section 14B and interest under Section 7Q of the Act on account of delayed remittance of the provident fund dues. Ext.P10 is the appellate order passed by the Employees Provident Fund Appellate Tribunal, New Delhi in ATA No.427(7) of 2009. It is held by the appellate authority that the power to impose damages under Section 14B is a judicial power which confers upon the Provident Fund W.P.C.No.15187/13 2 Commissioner a discretion to impose damages not exceeding the amount of arrears within the ceiling that is imposed by the Statute. The nature of power being quasi-judicial, the exercise of jurisdiction must be for sound and objective consideration. Reference is also made to Regulation 32A regarding the scale of damages which can be imposed for the delay in remitting the provident fund dues in time. The appellate authority relied upon the judgment of the Supreme court in **Pretolite (India) Ltd. v. Regional Director** _[AIR 1994 SC 521]_ wherein it is held that even if the Regulations have prescribed general guidelines, and upper limits at which the imposition of damages can be made, it cannot be contended that in no case the mitigating circumstances can be taken into consideration by the adjudicating authority in finally deciding the matter, as the adjudicating authority is not bound to act mechanically in applying the upper most limit of the table. It is found that in the case on hand, there has been unquestionable default on W.P.C.No.15187/13 3 the part of the petitioner which would attract Section 14B. Further, it is found that the Officer conducting enquiry under Section 14B of the Act has considered all the submissions made by the appellant and found that the petitioner is liable to pay damages as determined by the respondent. 3. It is inter alia contended by the petitioner that the petitioner is funded by the Government of Kerala and it is suffering huge financial constraints. The Government provided certain financial aid pursuant to which the Societies were revived and the provident fund dues were being paid. It is contended that it was on account of the paucity of funds/ delay in grant of funds/non-sanctioning of funds that there occurred delay in payment of provident fund dues. The petitioner further contends that the authorities ought to have considered the plight of the organisation which has been incorporated as a Society for the purpose of undertaking various other societies which were defunct and to provide employment for large number of persons. In that W.P.C.No.15187/13 4 circumstances, the authorities ought to have reduced the damages and interest imposed on the petitioner. 4. A statement is filed by the learned Standing Counsel appearing for the respondent inter alia stating that the petitioner is an Apex Co-operative Society under the Kerala Co-operative Societies Act which runs several cashew factories in the State which are all independently covered. It is contended that the factories owned by the petitioner are chronic and persistent defaulters in remitting statutory contribution under the Act for several years. The respondent substantiates the fact that the damages and interest imposed are liable to be paid on account of the fact that the delay was admitted. The learned counsel also relies upon various judgments of the High Courts and the Supreme Court in order to substantiate that the levy of damages is justified. It is submitted that in so far as there is no illegality or perversity in the order passed by the Appellate Tribunal confirming the imposition of damages as well as liability to W.P.C.No.15187/13 5 pay interest, there is no reason for interfering with the same. 5. Learned counsel for the petitioner however relies upon the judgment of this Court in W.P.C.No.10181 of 2010 wherein this Court had, after taking into consideration the factual circumstances involved in the matter, reduced the damages imposed by the appellate authority to 10% of the amount as specified in the demand. It is contended by the learned counsel for the petitioner that the said judgment has become final on account of the Division Bench confirming the same in **Employees Provident Fund Organisation v. Sreekamakshy Agency (Pvt.) Ltd.** _[2013(2) KLT 996]_ . 6. It is relevant to note that the concessions that are required to be given as far as damages is concerned is purely on the basis of the factual situation arising in the case. The petitioner Society has taken a uniform stand before the adjudicating officer as well as before the appellate authority that it was suffering huge losses and it was not on account of any deliberate act but on account of W.P.C.No.15187/13 6 the delay in obtaining funds from the Government that the Provident Fund dues could not be remitted. Ext.P8 is the Memorandum of Appeal filed by the petitioner before the appellate authority. It is clearly stated as to why there was delay in payment of the dues and therefore the damages should be waived. It is stated in the Memorandum of Appeal that the petitioner is engaged in procuring raw cashew nuts and processing the same through primary societies with the main objective of giving employment to the workers in the cashew industry and it has been going through a period of acute financial crisis over the last five years. The petitioner survives only on the basis of the grant given by Government of Kerala and it was in such circumstances that the CAPEX could not make prompt remittances of contribution to the provident fund in respect of its employees. 7. It is further stated that from July 2007 onwards, CAPEX has been making regular remittances in this regard which includes both the employers as well as the employees W.P.C.No.15187/13 7 contribution. It is therefore relevant to note that the financial crisis was a factor which was highlighted by the petitioner before the appellate authority as well as before the adjudicating authority but on a perusal of the impugned orders, such a fact has not been taken into consideration whereas the authority proceeded on the basis, after placing reliance on the judgment in **M/s.Arvind Mills Ltd v. R.M.Gandhi** _[1982 LIC 344 (Guj.DB)]_ that financial hardship alone cannot be a criteria. As already held by this Court in **Sreekamakshy Agency** ’s case (supra) financial crisis, of course is a factor to be considered. It depends upon the facts of each case. When the contribution has been paid and if it is found that there was no deliberate inaction on the part of the petitioner in paying the amount but was on account of certain financial crisis they were put to, such matters are definitely required to be considered by the appropriate authorities. Under such circumstances, definitely necessary reduction in the damages ought to have W.P.C.No.15187/13 8 been granted by the adjudicating authority as well as the appellate authority. 8. Ext.P2 is the order dated 24/09/2007 of the Employees Provident Fund Organisation imposing on the petitioner damages under Section 14B for the period from 03/2004 to 06/2007 totalling an amount of Rs.8,20,538/-. Ext.P3 is the order dated 24/09/2007 imposing on the petitioner interest under Section 7Q at the rate of 12% per annum for the delay in payment of the contribution for the period from 03/2004 to 06/2007. The total amount claimed is Rs.2,70,739/-. Exts.P2 and P3 were with reference to the delay in payment of contribution by M/s.Pathiyoor Cashew Workers Industrial Co-operative Society. Ext.P4 is a determination of damages by the EPF organisation under Section 14B in respect of M/s.Eruva Cashew Worker’s Industrial Co-operative Society Limited for a period from 03/2000 to 10/2006 amounting to Rs.8,51,328/-. The order passed at Ext.P10 would indicate that the appeal is filed W.P.C.No.15187/13 9 against the order dated 21/09/2007 imposing damages under Section 14B and order dated 24/09/2007 imposing interest under Section 7Q of the Act. Having regard to the nature of contentions urged and the factual circumstances projected in the above writ petition especially the plight of the petitioner Society, I am of the view that Ext.P10 is liable to be modified to the extent of reducing the demand for damages at 10% of the amount claimed for the impugned period in terms of Exts.P2 and P4. 9. But, having regard to the fact that interest is a statutory liability, I do not think that the petitioner can challenge the levy of interest under Section 7Q of the Act. Under these circumstances, this writ petition is disposed of as under: i) Exts.P2, P4 and P10 are modified limiting the liability of the petitioner to pay damages at 10% of the amount specified therein. W.P.C.No.15187/13 10 ii) Petitioner shall be liable to pay the interest as demanded by the Organisation. (sd/-) **(A.M.SHAFFIQUE, JUDGE)** jsr