High Court of KeralaSingle Judge2014-12-02Writ petition disposed of; recovery kept in abe...

Lolamol Motors, Mayyanad, Kollam v Employees' Provident Fund Appellate Tribunal, Assistant Provident Fund Commissioner & Recovery Officer, Employees' Provident Fund

Case / Petition Number:WP(C).No. 5747 of 2012 (P)

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: K. Vinod Chandran
Judgment Date: 2014-12-02
Court Decision / Holding: The writ petition is dismissed on merits with no costs. The court notes that the petitioner admitted delay in contributions and that damages under Section 14B and interest under Section 7Q were computed. While Harrisons Malayalam is not applicable to grant relief for hardship due to lack of material before the original authority, the court directs that recovery, if not concluded, shall be kept in abeyance on condition of the petitioner paying ten equal monthly instalments; first instalment due by 5 January 2015 and subsequent instalments on the 5th of each month. The respondent shall issue a statement of dues as of 30 December 2014 within two weeks, and the instalments shall be paid accordingly. If two consecutive instalments are defaulted, recovery shall revive. Certified copy of the judgment must be produced within two weeks. No costs.
Final Disposition: Writ petition disposed of; recovery kept in abeyance subject to instalment payment; no costs.

Parties to the Case

Appellants / Petitioners

Lolamol Motors, represented by D. Garry Das, Managing Partner

Respondents

Employees' Provident Fund Appellate Tribunal, Ministry of Labour and Employment, Delhi
Assistant Provident Fund Commissioner, EPF, Kollam
Recovery Officer, EPF, Kollam

Legal Representation & Advocates

Counsels for Petitioners

• Sri B. Mohanlal
• Sri T. Prasad
• Sri Saiju S.

Counsels for Respondents

• Sri V. V. Suresh, SC

Case Synopsis & Summary

This writ petition challenges Ext.P2, the EPF Appellate Tribunal’s order dated 14 June 2011 under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952. The original assessment under Section 7A, followed by damages under Section 14B and interest under Section 7Q for delays in contribution payments during 2002–2009, was the subject matter of the appellate challenge. The petitioner contends that there were no arrears at the inception of the proceedings and that the delay was caused by circumstances warranting mitigation of damages, citing financial hardship. However, crucial orders and mitigation materials before the original authority were not placed before the appellate court, limiting judicial scrutiny. The appellate order is read against the backdrop of admitted delay in contributions, with damages and interest arising from late payments, and the government appeals to established precedents. The court distinguishes the petitioner’s lack of substantiation for hardship before the original authority and relies on jurisprudence regarding non-arrears and the non-appealability of certain 7Q amounts. Ultimately, while upholding the financial diligence of the petitioner, the court directs a staged repayment and keeps recovery in abeyance, subject to strict monthly instalments, with a confirmed payment schedule and no costs.”

Provisions of Law Cited

Section 14B of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952Section 7A of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952Section 7Q of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952EPF Scheme, 1952 – Section 32 (pre-amendment)EPF Scheme, 1952 – Section 32A (post-amendment)G.S.R. 521 (1991) amending Section 32A

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioner contends Ext.P2 (14 June 2011) wrongly imposes damages under Section 14B and interest under Section 7Q for delays in contributions during 2002–2009. It is argued that there were no arrears at the start of proceedings and that mitigation due to financial hardship should have been considered; material showing hardship was not properly before the appellate authority; reliance on Harrisons Malayalam for mitigation is sought but not firmly established before the lower authority.

Contentions of Respondents

The respondents argue that the appellate order correctly notes delays but also that there were no arrears at the outset; damages under 14B and interest under 7Q were properly imposed; the 7Q amount is not appealable (citing Arcot Textile Mills) and the court should not interfere; the rate of damages and the amendment to Section 32A are relevant but the relief sought would undermine EPF objectives; lack of mitigation materials before the original authority is highlighted.

Cited Precedents (2)

Case Name	Citation	Treatment	Explanation
Regional Provident Fund Commissioner v. Harrisons Malayalam Ltd.	(2013(3) KLT 790)	Mentioned Only	Cited to discuss potential mitigation for hardship, but not applied due to lack of material before the original authority.
Arcot Textile Mills Ltd. v. Regional Provident Fund Commissioner	AIR 2014 SC 295	Positive	Supreme Court held that the amount demanded under Section 7Q is not appealable; relied upon by the court to justify non-interference with 7Q proceedings.

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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 K.VINOD CHANDRAN** **TUESDAY, THE 2ND DAY OF DECEMBER 2014/11TH AGRAHAYANA, 1936** ## **WP(C).No. 5747 of 2012 (P) ---------------------------** ## **PETITIONER:** **-------------------** **LOLAMOL MOTERS, MAYYANAD, KOLLAM, REPRESENTED BY ITS MANAGING PARTNER D.GARRY DAS, S/O.DHARMADAS, RESIDING AT REMANIKA, MAYYANAD P.O., KOLLAM - 691 303.** ## **BY ADVS.SRI.B.MOHANLAL SRI.T.PRASAD SRI.SAIJU S.** ## **RESPONDENT(S):** **-------------------------** **1. THE EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL, (MINISTRY OF LABOUR AND EMPLOYMENT) CORE-2, 4THFLOOR, SCOPE MINAR, LAKSHMI NAGAR DISTRICT CENTRE, DELHI - 110 092, REPRESENTED BY ITS REGISTRAR.** **2. THE ASSISTANT PROVIDENT FUND COMMISSIONER, EMPLOYEES PROVIDENT FUND, PARAMESWARA NAGAR, OPPOSITE ARCHANA ARADHANA THEATRE, KOLLAM - 691 001.** ## **3. THE RECOVERY OFFICER,** **EMPLOYEES PROVIDENT FUND, PARAMESWAR NAGAR, OPPOSITE ARCHANA ARADHANA THEATRE, KOLLAM - 691 001.** **BY SRI.V.V.SURESH,SC** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 02-12-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **mbr/** ## **WP(C).No. 5747 of 2012 (P) -------------------------------------** **APPENDIX** **PETITIONER(S) EXHIBITS: ------------------------------------** **EXT.P-1 THE TRUE COPY OF THE ORDER NO.KR-KLM/22157/PD/09-10/5426 DATED 23.12.2010 ISSUED BY THE 2ND RESPONDENT. EXT.P-2 THE TRUE COPY OF THE ORDER DATED 14.06.2011 IN ATA NO.412(7) 2010 ISSUED BY THE 1ST RESPONDENT. EXT.P-3 THE TRUE COPY OF THE ORDER NO.KR/KLM/22157/PD/2010-11 DATED 05.09.2011 ISSUED BY THE 2ND RESPONDENT. EXT.P-4 THE TRUE COPY OF THE ORDER NO.KR/KLM/22157/PD/2010-11/3519 DATED 27/10/2011 ISSUED BY THE 2ND RESPONDENT.** **RESPONDENTS' EXHIBITS: - NIL ---------------------------------------** ## **/TRUE COPY/** **P.S. TO JUDGE** **mbr/** ## **K. Vinod Chandran, J.** ==================================== W.P.(C)No.5747 of 2012 ==================================== Dated this the 2[nd] day of December, 2014. ## **JUDGMENT** 1. Petitioner is aggrieved with Ext.P2 order of the Employees' Provident Fund Appellate Tribunal in ATA 412(7)/2010 dated 14.6.2011. Admittedly, the appeal was filed against an order under Section 14B of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952. However, the said order passed by the original authority, which was the subject-matter of the appeal, has not been produced herein. It is not clear as to when 7A enquiry under the Act was initiated and order passed therein. On a reading of Ext.P4 order passed consequent to Ext.P3, it is evident that, the damages levied was for the period 5/2002 to 2/2009. Obviously, the assessment under Section 7A was completed for the aforesaid periods and as a consequence of the delay in contributions occasioned, an order was passed on 2.3.2010 levying damages under Section 14B amounting W.P.(C)No.5747 of 2012 -:2:- to Rs.5,59,590/- and interest under Section 7Q amounting to Rs.2,18,337/-. It is this order which was challenged before the appellate authority. 2. But for the fact that the petitioner asserts financial difficulties, the petitioner does not seem to have been produced any order before the appellate authority to substantiate such claim. It is also not clear as to whether any mitigation with respect to the financial difficulties was sought for before the original authority, when notice was issued under Section 14B. The objections filed therein and the order itself have not been produced in the above original petition. Hence, this Court is disabled to look into the same. 3. Going by the appellate order, learned counsel for the petitioner would submit that, it clearly indicates that, there was no arrears when the proceedings started. On a reading of paragraph 8, what is discernible is that, the petitioner had admitted that delay was occasioned in paying contributions. The said delay presumably had W.P.(C)No.5747 of 2012 -:3:- resulted in Section 7A proceedings being initiated. The delay in payment of contributions led to assessment under Section 7A and consequently the statutory damages and interest were sought to be incurred by a subsequent notice. The finding of the Tribunal that there are no arrears can only be with respect to the defaulted contributions, which were occurred under Section 7A. The petitioner would have paid up the entire contributions as assessed by the authority. However, the damages is with respect to the delay caused which is levied under Section 14B and interest is automatic under Section 7Q. 4. The reliance placed by the counsel on the decision of this Court in **Regional Provident Fund Commissioner v. Harrisons Malayalam Ltd.** reported in ( **2013(3) KLT 790** ) does not at all come to the aid of the petitioner. True, the financial difficulties were held to be sufficient reason to reduce the damages levied or to waive it as such. As was indicated earlier, the petitioner's contentions before the W.P.(C)No.5747 of 2012 -:4:- original authority is not placed before this Court. The appellate authority's order would disclose that, no substantial grounds were raised or materials placed before the authority to substantiate the grounds of mitigation on account of financial hardship. In such circumstances this Court is not inclined to interfere with Ext.P2 order. 5. It is also to be noticed that Ext.P2 order was passed on 14.6.2011 and the petitioner did not choose to challenge it within a reasonable time. Only when the said proceedings culminated in Ext.P4 recovery, the petitioner thought it fit to challenge the order and consequential computation made as per Ext.P4. With respect to the amount demanded as per Section 7Q, it is trite that the same is not appealable as held by the Supreme Court in **Arcot Textile Mills Ltd.** **v. Regional Provident Fund Commissioner** reported in ( **A.I.R. 2014 SC 295** ). In such circumstances, there could be no interference caused to the orders issued under Sections 14B and 7Q. W.P.(C)No.5747 of 2012 -:5:- 6. However, it is pointed out by the learned counsel for the petitioner that the rate of damages has been substantially amended in the Employees Provident Fund Scheme, 1952. Section 32, as it existed prior to amendment, specify rate of 37% to be applied for default beyond six months. The scheme has been amended and Section 32A, as it stands now, substituted by GSR 521 dated 16.8.1991 (w.e.f.1.9.1991) provides for 25% of arrears per annum for a period of default exceeding six months. However, looking at Ext.P4, despite the direction of the Appellate Tribunal, to compute interest at the rate of 37%, noticing the amendment, the officer has computed the interest only at 20%. Hence, no interference can be caused and the petition is devoid of merit. The amounts credited shall be accounted and the respondent authority shall issue a statement of the dues, as on today, within a period of two weeks from today. 7. Considering the confined prayer made for instalments, it is directed that the recovery, if not already concluded, shall be kept in abeyance W.P.(C)No.5747 of 2012 -:6:- on condition of the petitioner settling the entire loan in ten equal monthly instalments. The petitioner shall produce a certified copy of this judgment within two weeks of its receipt. The respondent organization shall quantify the dues as on 30.12.2014 and issue a statement of accounts by registered post, in accordance with which the instalments shall be paid. The 1[st] instalment shall be paid on or before 5.1.2015 and thereafter; the due date of instalments falling on the 5[th] of each succeeding month. If default is committed in two consecutive instalments, then the recovery proceedings shall revive and continue. The writ petition stands disposed of as above. No costs. ## **K. Vinod Chandran, Judge.** sl.