KERALA WEALTH RESEARCH & WELFARE SOCIETY v. EMPLOYEES' PROVIDENT FUND APPPELLATE TRIBUNAL, EMPLOYEES' PROVIDENT FUND ORGANISATION & THE ASSISTANT PROVIDENT FUND COMMISSIONER

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN** ## **THURSDAY, THE 24TH DAY OF OCTOBER 2019 / 2ND KARTHIKA, 1941** ## **WP(C).No.9874 OF 2011(H)** ## **PETITIONER:** **KERALA WEALTH RESEARCH & WELFARE SOCIETY, GENERAL HOSPITAL CAMPUS, THIRUVANANTHAPURAM REPRESENTED BY ITS MANAGING DIRECTOR.** **BY ADVS. SMT.A.K.PREETHA SRI.ANIL NARAYANAN** ## **RESPONDENTS:** **1 EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL, CORE-2, 4TH FLOOR, SCOPE MINAR, LAXMI NAGAR, NEW DELHI - 1100092. 2 EMPLOYEES PROVIDENT FUND ORGANIZATION, REGIONAL OFFICE, BHAVISHYA NIDHI BHAVAN, PATTOM, THIRUVANANTHAPURAM - 695 004, REPRESENTED BY THE REGIONAL PROVIDENT FUND COMMISSIONER.** - **3 THE ASSISTANT PROVIDENT FUND COMMISSIONER, EMPLOYEES' PROVIDENT FUND ORGANIZATION, REGIONAL OFFICE, BHAVISHYA NIDHI BHAVAN, PATTOM, THIRUVANANTHAPURAM - 695 004** **R1 BY ADV. SRI.N.N.SUGUNAPALAN SR. R2-3 BY ADV. SMT.T.N.GIRIJA, SC, EPF ORGANISATION** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 24.10.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **WP(C).No.9874 OF 2011(H)** **2** ## **JUDGMENT** This writ petition is filed seeking the following prayers: - _“a) A writ of certiorari or any other appropriate writ, order or direction quashing and setting aside Exhibits P2 and P4._ - _b) A writ of mandamus or any other appropriate writ, order or direction directing the 1[st] respondent to reconsider Exhibit P3 appeal in accordance with law._ - _c) Declare that imposition of damages under Section 14 B of the Act is unwanted on the facts and circumstances of the case”_ 2. Heard Smt.A.K. Preetha, the learned counsel for the petitioner and Smt.T.N.Girija, the learned Standing Counsel appearing for the Employees' Provident Fund Organisation. 3. It is submitted by the learned counsel for the petitioner that Ext.P2 assessment order has been passed in a mechanical manner, without considering the specific ground of financial difficulty urged by the petitioner. It is also submitted that though a statutory appeal has been preferred as Ext.P3 by the Society, the same has also been dismissed by a stereotyped order, Ext.P4. It is further submitted that the petitioner is a fully Government owned Society and that the major income of the Society is the rent collected from pay wards attached to the Government hospitals in the State. It is also stated that **WP(C).No.9874 OF 2011(H)** **3** disbursement of amounts by the Society is regulated through Government Treasury and that the petitioner has specifically raised a ground that the Treasury ban and restrictions placed by the Government during the relevant period was the reason for the inability on the part of the Society, in making the payments in time. It is stated that, by Ext.P2, without any consideration of the contention raised by the petitioner based on financial difficulty for the delay in making the payments, the maximum penalty has been imposed by the 3[rd] respondent. It is stated that though Ext.P3 statutory appeal has been preferred against Ext.P2 pointing out the factual aspects as also seeking a re-consideration of the issue, taking note of the ground of financial difficulty raised by the petitioner, the appeal has also been dismissed by the Employees' Provident Fund Appellate Tribunal, New Delhi. 4. The learned counsel for the petitioner would place reliance on a decision of the Apex Court in **Employees State Insurance Corporation v. HMT Ltd. and Another** [2008 KHC 4060] to contend that there is an element of discretion in the matter of imposition of penalty under Section 14B of the Employees' Provident Funds and **WP(C).No.9874 OF 2011(H)** **4** Miscellaneous Provisions Act, 1952, (for short 'the Act') and that the reasons stated by the establishment should be considered before such discretion is exercised. It is further held that the existence of _mens rea or actus reus_ to contravene a statutory provision must also be a necessary ingredient for levy of damages and/or quantum thereof. It is submitted that in the instant case, the petitioner has specifically stated that there is no wilful intention to delay the payments and that the delay occurred was due to the reasons beyond the control of the petitioner. It is submitted that the said contentions have not been considered by the respondents. 5. The 3[rd] respondent has filed a counter affidavit. It is stated therein that the grounds raised in the writ petition are not sustainable and that the 3[rd] respondent is vested with the power under Section 14B of the Act to levy penal damages. It is stated that the ground raised by the petitioner, that it is a fully Government run Society and that it had financial difficulties during the relevant time, will not be a sufficient ground to explain the delay in payment of the contribution. Relying on the decisions of the Apex Court in **Hindustan Times Ltd. v. Union of India and Others** [(1998) 2 SCC 242] and in **Organo Chemical** **WP(C).No.9874 OF 2011(H)** **5** **Industries & Another v. Union of India & Others** [(1979) 4 SCC 573. It is contended that there is ample power under Section 14B of the Act to impose penalty, where it is found that the Employees' Provident Fund contribution has not been made within time. 6. Having considered the contentions advanced, it is not in dispute that Section 14B of the Act empowers the 3[rd] respondent to pass an order imposing penalty where the contributions are not paid in time. However, a reading of the provision would make it clear that the power to recover damages or to impose penalty is a discretionary power and that the issue as to the necessity for the imposition of the damages as well as the quantum of damages to be imposed is to be considered by the appropriate authority, taking note of all relevant factors. A division Bench of this Court in **Regional Provident Fund** **Commissioner v. Harrisons Malayalam Ltd. & Others** [2013 KHC 3331] has clearly considered the provisions of the Act as well as the precedents on the point and has held that the stand taken that financial constraints is not a relevant ground justifying delay, is not a sustainable contention. It has been held that where a ground of financial constraints is raised and there is material to show that such contention **WP(C).No.9874 OF 2011(H)** **6** is a _bona-fide_ contention, the authority has to consider such aspect also while passing an order with regard to the imposition of the penalty. 7. It is not in dispute that the power under Section 14B of the Act is a discretionary power and the discretion has to be exercised by the appropriate Authorities, taking note of the relevant aspects. It is clear that the existence of financial difficulty and treasury ban has been specifically pleaded by the petitioner before the 3[rd] respondent. However, the consideration by the 3[rd] respondent is limited to the statement that the said pleadings have no relevance since the Society has to recover and deposit the dues within the stipulated time. 8. It appears that no discretion has been exercised in matter of fixation of quantum of the penalty as well. It is seen from Ext.P2 that the maximum amount recoverable as penalty, going by the table provided in the scheme, has been imposed. Though a statutory appeal has been preferred as Ext.P3, it was dismissed by Ext.P4 order, stating that financial difficulty is not a ground on which delay in making contribution could be explained. In view of the facts and circumstances of the case, I am of the **WP(C).No.9874 OF 2011(H)** **7** opinion that the confirmation of the imposition of maximum penalty, without considering the ground of financial difficulty was vitiated by want of application of mind. Ext.P4 order is, therefore, set aside. The matter is remanded to the 2[nd] respondent for a re-consideration of the issue, taking note of the binding decisions of the Apex Court as well as this Court. The appeal shall be reconsidered after hearing the parties and an appropriate order shall be passed by the 2[nd] respondent within a period of 3 months from the date of receipt of a copy of this judgment. This writ petition is ordered accordingly. ## **Sd/-** **ANU SIVARAMAN JUDGE** Skk//261019 **WP(C).No.9874 OF 2011(H)** **8** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** **EXHIBIT P1 TRUE COPY OF THE OBJECTION SUBMITTED BY THE PETITIONER BEFORE THE 3RD RESPONDENT DATED 28-10-2003.** **EXHIBIT P2 TRUE COPY OF THE ORDER PASSED BY THE 3RD RESPONDENT DATED 28-10-2003. EXHIBIT P3 TRUE COPY OF THE APPEAL (ATA 273(7) 2004) FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT. EXHIBIT P4 TRUE COPY OF THE ORDER DATED 07-12-2010 PASSED BY THE 1ST RESPONDENT.** **RESPONDENTS' EXHIBITS: NIL**