Mathew Perumali & Co. v. Regional Provident Fund Commissioner, Ernakulam and Others

## IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN FRIDAY, THE 21ST DAY OF MARCH 2014/30TH PHALGUNA, 1935 ## OP.No.7994 of 2001 (B) ------------------------ PETITIONER : ----------- MATHEW PERUMALI & CO., PIGEE AGENCIES, VELI ROAD, COCHIN -1, REP. BY MATHEW, PERUMALI, 69 YEARS PROPRIETOR OF THE FIRM. BY ADVS.SMT.M.K.PUSHPALATHA SMT.K.G.SAROJINI RESPONDENTS : ------------- 1. COMMISISIONER, REGIONAL PROVIDENT FUND OFFICE, KALOOR, COCHIN - 17. 2. THE RECOVERY OFFICER, OFFICE OF THE RECOVERY OFFICER, EMPLOYEES PROVIDENT FUND, BHAVISHYANDINU BHAVAN, KALOOR, COCHIN - 17. ADDL.R3. M.O.ANTONY, MANNALI HOUSE, KUMBALANGHI.P.O., KOCHI-7. ADDL.R4. N.SHANKARAN KUTTY, SHALYAM HOUSE, AROOR.P.O., CHERTHALA, ALAPPUZHA DISTRICT. ADDL.R5. A.C.VARGHEESE, ALATHARA HOUSE, EZHUPUNNA SOUTH.P.O., CHERTHALA, ALAPPUZHA DIST. OP.No.7994 of 2001 (B) |ADDL.R6.|A.B.VARGHESE,| |---|---| ||ARAKKAPARAMBIL HOUSE,| ||KUMBALANGHI.P.O.,| ||KOCHI-7.| |ADDL.R7.|C.C.THANKAPPAN,| ||AMBADI (CHEEPEDITHARYIL) HOUSE,| ||PERUMPALAM.P.O.,| ||CHERTHALA, ALAPPUZHA DIST.| |ADDL.R8.|V.I.VARGHEESE,| ||VADAKADATH HOUSE,| ||PUTHU VYPE,| ||VALAPPU.| |ADDL.R9.|M.A.ANTONY,| ||MAROTTIKKAPARAMBIL HOUSE,| ||KARTHEDAM,| ||VYPIN.| |ADDL.R10.|V.KUNJUMON,| ||OMANASSERIL HOUSE,| ||PADANILAM.P.O.,| ||NOORANADU.| |ADDL.R11.|C.C.KUNJAPPAN,| ||KADAPARAMBU COLONY,| ||PERUMBALAM,| ||CHERTHALA, ALAPPUZHA DIST.| |ADDL.R12.|K.A.KUMARAN,| ||VELIYIL NIKARATH,| ||ARUKUTTY,| ||VADUTHALA JETTY.P.O.| |ADDL.R13.|C.K.PEETHAMBARAN,| ||CHALINGATHARA HOUSE,| ||AROOR.P.O.,| ||CHERTHALA.| |ADDL.R14.|K.K.RAGHAVAN,| ||NIKARTHILVEEDU,| ||EDAKOCHI.P.O.,| ||PAMPAI MOOLA,| ||KOCHI-6.| |ADDL.R15.|P.A.GEORGE,| ||KOODATHIL VEEDU,| ||VALAPPU WEST,| ||PUTHU VYPE.P.O.,| ||PIN - 682 511 .| OP.No.7994 of 2001 (B) |ADDL.R16.|V.K.SOMAN,| |---|---| ||VALIYATHARA HOUSE,| ||MALIPPURAM.P.O.,| ||PIN - 682 511.| |ADDL.R17.|K.B.SANTHOSH KUMAR,| ||KANADI HOUSE,| ||MADAPPLATHURUTH,| ||MOOTHANKUNNAM.P.O.,| ||PIN - 683 516.| |ADDL.R18.|A.M.ANTONY,| ||S/O.A.V.MARCO,| ||ARAKKAL VEEDU,| ||CHELLANAM PANCHAYAT,| ||PALLURUTHY.| |ADDL.R19.|T.C.XAVIER,| ||THAREPARAMBIL HOUSE,| ||PALLURUTHY,| ||KOCHI-6.| |ADDL.R20.|K.O.FRANCIS,| ||KANAPPALLY HOUSE,| ||PALLURUTHY.P.O.,| ||KOCHI.6.| |ADDL.R21.|K.K.LENIN,| ||KARAPARAMBIL HOUSE,| ||PALLURUTHY.P.O.,| ||KOCHI.6.| |ADDL.R22.|K.J.JOY,| ||KADEPARAMBIL HOUSE,| ||PALLURUTHY.P.O.,| ||KOCHI-6.| |ADDL.R23.|M.AMAN,| ||U.K.HOUSE,| ||KALLUVETTAMKUZHI,| ||MAMKODE.P.O.,| |ADDL.R24.|M.K.PUSHKARAN,| ||PURAMBOKKIL HOUSE,| ||PALLURUTHY NADA,| ||KOCHI.6.| |ADDL.R25.|K.P.JACOB,| ||KANTHAKUDI THARA,| ||PERUMPADAPPU,| ||KOCHI.6.| OP.No.7994 of 2001 (B) ADDL.R26. K.K.LELITHA, KANTHAKUDI THARA, PERUMPADAPPU, KOCHI.6. ADDL.R27. C.M.PAVITHRAN, ULLADAM PARAMBIL, PALLURUTHY, KOCHI.6. ADDL.R28. T.A.HUSSAIN, H.No.2/1020, THURUTHI COLONY, KOCHI.1. ADDL.R29. K.A.NAZAR, H.No.4/3595, BANTHAKKA PARAMBU, MATTANCHERRY. ADDL.R30. K.B.HARI, KARAPARAMBU HOUSE, PALLURUTHY, KOCHI-6. (ADDITIONAL R3 TO R30 IMPLEADED AS PER ORDER DATED 21/8/2001 IN C.M.P.No.39649/2001) R1 & R2 BY ADV. SRI.N.N. SUGUNAPALAN, SC, P.F. R3 TO R30 BY ADV. SRI.MURALI PURUSHOTHAMAN THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 21-03-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ## OP.No.7994 of 2001 (B) ## APPENDIX PETITIONER'S EXHIBITS :- EXHIBIT P1 : COPY OF THE LETTER SENT BY THE PETITIONER TO RESPONDENT No.1 DTD.7/6/1995. EXHIBIT P2 : COPY OF THE LETTER No.KR/KC/13503/Enf I (2)/96 DTD.15/3/1996. EXHIBIT P3 : COPY OF THE LETTER SENT BY THE PETITIONER DTD.4/4/1996. EXHIBIT P4 : COPY OF THE LETTER DTD.24/2/1998 SENT TO THE PETITIONER BY THE FIRST RESPONDENT. EXHIBIT P5 : COPY OF THE LAWYER NOTICE DTD.3/3/1998 ADDRESSED TO RESPONDENT No.1. EXHIBIT P6 : COPY OF LAWYER NOTICE DTD.18/5/1999 ADDRESSED TO THE 2ND RESPONDENT. ## RESPONDENTS' EXHIBIT :- NIL. True copy P.A. To Judge ## **ANIL K.NARENDRAN, J. ------------------------------------O.P.No.7994 of 2001 --------------------------------------Dated this the 21[st] day of March, 2014** ## **JUDGMENT** This Original Petition is filed seeking a writ of mandamus directing the second respondent, the concerned Recovery Officer of the Employees Provident Fund Organisation, to withdraw the coercive steps by freezing the bank accounts of the proprietary concerns M/s. Mathew Perumali & Co. and Pigee Agencies; and a writ of mandamus directing the first respondent, the Regional Provident Fund Commissioner, Ernakulam, to allot code number for remittance of provident fund of the workers of M/s. Mathew Perumaly & Co. 2. According to the petitioner, M/s. Mathew Perumali & Co. and Pigee Agencies are two proprietary concerns owned by one Mathew Perumali, a Civil Engineering Contractor. The petitioner by Ext.P1 letter requested the first respondent to allot code number for remittance of provident fund in respect of 21 workers referred to therein. Later, the first respondent O.P.No.7994 of 2001 2 by Ext.P2 requested the petitioner to enroll the employees working at FACT godown, Willington Island, who have not been enrolled as EPF members. The petitioner was further requested to remit the dues from 1971 to 3/93 and forward the returns to the first respondent within 15 days of receipt of Ext.P2. The first respondent advised the petitioner to abide by the statutory requirements of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, (hereinafter referred to as 'the EPF Act' only) and the schemes framed thereunder, by remitting the arrears within the prescribed time limit, in order to avoid legal action. 3. On receipt of Ext.P2 communication petitioner submitted Ext.P3 reply pointing out that, he had not undertaken any contract work in FACT Godown at Willington Island from 1971 as alleged and the bagging work has been done by the workers of Cochin Thuramugha Thozhilali Union (CTTU) till 31/12/1992. On 01/01/1993, the said union has provided 20 workers to the petitioner for bagging phosphate in O.P.No.7994 of 2001 3 FACT Godown at Willington Island and the petitioner has been remitting provident fund contribution from that date onwards. Therefore, the first respondent was requested not to take any legal step for non-payment of contribution for the period prior to 01/01/1993. But, by Ext.P4 proceedings of the first respondent ₹47,147/- was levied as damages, under Section 14B of the EPF Act, for delayed payment of contributions, administrative charges, etc., payable under the EPF Act and the Schemes made thereunder. On receipt of Ext.P4 proceedings the petitioner caused to issue Exts.P5 and P6 lawyer notices and thereafter, approached this Court in this Original Petition aggrieved by the coercive steps taken by the respondents 1 and 2. 4. The first respondent filed counter affidavit justifying the levy of damages in Ext.P4. According to the first respondent, the establishment has been covered voluntarily under Section 1(4) of the EPF Act and the Schemes framed thereunder, with effect from 01/04/1992, with Code No.KR O.P.No.7994 of 2001 4 13503. The petitioner, who owns two proprietary concerns, i.e., M/s. Mathew Perumali & Co. and Pigee Agencies, has been allotted with a PF code number and directed to remit the contributions with the fund using the code number allotted in respect of all the workers including the contract workers engaged by him. Allotment of separate code number was solely for administrative convenience at the discretion of the EPF Organisation and since the above mentioned two proprietary concerns are engaged in same nature of business, allotment of separate code number was not found necessary. As the petitioner failed to remit the damages levied in Ext.P4 proceedings, the second respondent attached the Bank account for realisation of the statutory dues. The levy of damages and the coercive steps taken are in accordance with the EPF Act and the Schemes made thereunder. 5. Addl. respondents 3 to 30, the employees under the petitioner, who were impleaded vide order dated 21/8/2001 in C.M.P.No.39649/2001, filed C.M.P.No.45223/2001 to vacate O.P.No.7994 of 2001 5 the interim order of stay dated 08/03/2001 granted in C.M.P.No.12971/2001. In the affidavit accompanying to C.M.P.No.45223/2001 they contended that, they were working under the petitioner for several years. From 1971 onwards they have been enrolled as members of the EPF Scheme and the petitioner has been deducting employees’ contribution from their wages. However, the petitioner failed to remit the same in the respective PF account. The first respondent by Ext.P2 advised the petitioner to abide by the statutory requirements of the EPF Act and the schemes framed thereunder. But, the petitioner failed to do so. Hence the first respondent issued Ext.P4 levying damages under Section 14B of the EPF Act. As the petitioner failed to remit the damages levied in Ext.P4, the second respondent initiated coercive steps to freeze the Bank accounts. 6. I heard arguments of the learned counsel for the petitioner, the learned Standing Counsel for respondents 1 and 2 and also the learned counsel for addl. respondents 3 to 30. O.P.No.7994 of 2001 6 7. The learned counsel for the petitioner contended that, remittance of contributions delayed due to non-allotment of separate code number and hence the levy of damages in Ext.P4 is legally unsustainable. Per contra, the learned Standing Counsel for respondents 1 and 2 and the learned counsel for addl. respondents 3 to 30 contended that, the levy of damages and the coercive steps taken against the petitioner are strictly in accordance with the EPF Act and the Schemes made thereunder. 8. I have considered the rival submissions made at the Bar. 9. It is not in dispute that, as contended by the first respondent, the petitioner’s establishment has been covered voluntarily under Section 1(4) of the EPF Act and the Schemes framed thereunder, with effect from 01/04/1992, with Code No.KR 13503. The only case of the petitioner is that, though by Ext.P1 he has requested the first respondent to allot code number for remittance of provident fund in respect of 21 O.P.No.7994 of 2001 7 workers referred to therein, without allotting the same the first respondent issued Ext.P2, which was followed by Ext.P4 proceedings levying damages under Section 14B of the EPF Act. On the other hand, the first respondent has contended that, allotment of separate code number was solely for administrative convenience at the discretion of the EPF Organisation and since the two proprietary concerns owned by the petitioner are engaged in same nature of business, allotment of separate code number was not found necessary. As the petitioner’s establishment has already been covered under the EPF Act and the Schemes framed thereunder, he has got a statutory duty to remit the contributions in the respective PF account, within the prescribed time. 10. Going by Section 14B of the EPF Act, where an employer makes any default in payment of any such contributions, the authorised officer may recover from the employer by way of penalty such damages, not exceeding the amount of arrears, as may be specified in the Scheme, O.P.No.7994 of 2001 8 provided that, before levying and recovering such damages, the employer shall be given a reasonable opportunity of being heard. The second proviso to Section 14B empower the Central Board to reduce or waive the damages levied under this section in relation to a sick Industrial company in respect of which a scheme for rehabilitation has been sanctioned by the BIFR. 11. The EPF Act is a labour welfare legislation enacted by the Parliament in order to provide social security benefits to the workers. Successful working of the Scheme depends on regular and prompt payment of contributions and strict compliance of the statutory requirements. Section 14B of the EPF Act has been enacted to penalise the defaulting employers and also to provide reparation for the loss suffered by the employees. It is not only a warning to the employers in general not to commit any breach of the statutory requirements but also meant to provide compensation or redress to the employees for the loss sustained by them. The O.P.No.7994 of 2001 9 Apex Court in **Organo Chemical Industries vs. Union of India** [AIR 1979 SC 1803 : 1979 (4) SCC 573], while considering the constitutional validity of Section 14B of the EPF Act, has observed that the predominant object of Section 14B is to penalise the employer so that he may be deterred from making any further default. The Apex Court has also opined that damages as imposed by Section 14B include a punitive sum quantified according to the circumstances of the case and the levy under Section 14B is penal in nature. 12. As borne out from Ext.P4, the petitioner failed to remit the various contributions payable under the EPF Act and the Schemes framed thereunder, for the period from 5/92 to 3/95. In the personal hearing conducted on 20/08/1997, the petitioner has not disputed the delay in remittance of the contributions payable and as found in Ext.P4, the contributions defaulted include the employees contribution deducted from their wages, which the petitioner failed to remit within the specified time. Therefore, the first respondent is well within O.P.No.7994 of 2001 10 his powers in levying damages, under Section 14B of the EPF Act, for the default committed by the petitioner in remitting the contributions payable. In such circumstances, I find no reason to interfere with Ext.P4 proceedings of the first respondent or the coercive steps taken by the second respondent to recover the damages levied. Accordingly, the challenge against the same fails and the petitioner is not entitled for any of the reliefs prayed. 13. Then, the learned counsel for the petitioner submitted that the petitioner is presently aged 84 years and he had closed down both the firms in the year 2001 due to acute financial stringency. Therefore, the learned counsel prays that, the petitioner may be granted installment facility to remit the amount covered by Ext.P4, otherwise serious prejudice and hardship would be caused to the petitioner. Considering the facts and circumstances of the case, I permit the petitioner to remit the amount covered by Ext.P4 in seven equal monthly installments commencing from 28[th] April, 2014. In case of O.P.No.7994 of 2001 11 default of any one of the installments, it will be open to respondents 1 and 2 to initiate appropriate recovery proceedings to recover the entire balance amount covered by Ext.P4. It is also made clear that once the entire amount covered by Ext.P4 is remitted by the petitioner, the first respondent shall take appropriate steps to pass on the said amount to the employees concerned, which shall be done without any further delay. The Original Petition is dismissed subject to above directions. No order as to costs. ## **ANIL K.NARENDRAN, JUDGE** skj True copy P.A. To Judge