M/S CENTRAL TRAVANCORE SPECIALISTS HOSPITALS LTD v. REGIONAL PROVIDENT FUND COMMISSIONER, EMPLOYEES PROVIDENT FUND ORGANIZATION, REGIONAL OFFICE KOCHI; CENTRAL GOVERNMENT INDUSTRIAL TRIBUNAL; SRI SAJEEV KUMAR K GOPAL

# **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** # **`PRESENT`** ## **`THE HONOURABLE MR. JUSTICE AMIT RAWAL`** ``` MONDAY, THE 28[TH] DAY OF NOVEMBER 2022 / 7TH AGRAHAYANA, 1944 ``` ## **`WP(C) NO. 29287 OF 2022`** ## **`PETITIONER:`** ``` M/S CENTRAL TRAVANCORE SPECIALISTS HOSPITALS LTD MULAKUZHA, CHENGANNUR, ALAPPUZHA 689 505. REPRESENTED BY ITS EXECUTIVE DIRECTOR, SRI PAUL KURIAN. ``` ``` BY ADVS. E.K.NANDAKUMAR (SR.) M.GOPIKRISHNAN NAMBIAR K.JOHN MATHAI JOSON MANAVALAN KURYAN THOMAS PAULOSE C. ABRAHAM RAJA KANNAN ``` ## **`RESPONDENTS:`** ``` 1THE REGIONAL PROVIDENT FUND COMMISSIONER EMPLOYEES PROVIDENT FUND ORGANISATION, REGIONAL OFFICE, 36/685 A, BHAVISHYANIDHI BHAVAN KALOOR, KOCHI-682 017. ``` ``` 2CENTRAL GOVERNMENT INDUSTRIAL TRIBUNAL 8TH FLOOR, KERALA STATE HOUSING BOARD BUILDING, PANAMPILLY NAGAR, ERNAKULAM, COCHIN - 682 016 ``` ``` SC SRI. SAJEEV KUMAR K GOPAL ``` ``` THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 28.11.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` WP(C) NO. 29287 OF 2022 ``` ``` 2 ``` ## **JUDGMENT** Order Ext.P2 dated 25.11.2019 of the Regional Provident Fund Commissioner assessing the damages to the extent of 100% under Section 14B of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter called ‘1952 Act’) and appellate order Ext.P5 dated 01.03.2022 allowing the appeal preferred by the petitioner in part, by reducing to 70%, are under challenge on behalf of the petitioner establishment defined under the 1952 Act. 2. Petitioner is a Public Limited Company registered under the Companies and Act and running a 160 bedded hospital consisting of various disciplines of specialty including medicines. In view of the provisions of 1952 Act, was assigned a code bearing No.KR/19227. For the period 2015 to 2019, company was alleged to be in losses and could not make the contribution of EPF while paying the wages of the employees. It entailed into initiation of proceedings under Section 7A of 1952 Act. The consequential effect of initiation of proceedings and ``` WP(C) NO. 29287 OF 2022 ``` ``` 3 ``` culmination gave a cause to the authorities to initiate proceedings under Sections 7Q and 14B of the 1952 Act. While initiating the proceedings of assessing the damages under Section 14B, petitioner placed on record balance-sheet reflecting the losses, rejecting the same, the amount was assessed to the tune of Rs.18,27,841/- and also interest under Section 7Q, which is stated to have been paid. Against the aforementioned order as noticed above, preference of appeal led to reduction in the amount to the extent of 70%. 3. Learned counsel appearing on behalf of the petitioner submitted that both the authorities have not taken into consideration, despite having noticed, the balance-sheets placed on record for the period 2015-2016 and 2018-2019 and particularly upto 2017 and closure of the hospital in 2020 and also taking over by the Government under the Disaster Management Act, 2005 in view of the Covid Pandemic. The possession of the hospital is still with the Government and for that a writ petition is stated to be pending, but the fact remains there was no mens rea on behalf of the petitioner as the ``` WP(C) NO. 29287 OF 2022 ``` ``` 4 ``` circumstances were beyond control, arising cause for further reduction to 25% by applying the plain and simple provisions of Section 14B of the 1952 Act. The judgment of the Supreme Court in _**Horticulture Experiment Station Gonikoppal, coorg**_ v. _**The Regional Provident Fund Organization**_ [2022 LiveLaw SC 202, Civil Appeal No.2136 of 2012] do not interdict the power of the writ court in examining the veracity of the judgment of the Appellate Court as the language of Section 14B do not restrict respondents from initiating the proceedings under Section 14B of the 1952 Act and examine the same in a pragmatic and reasonable manner. Owing to the interim order, an amount of Rs.3,50,000/- has been deposited, thus the impugned order is liable to be satisfied and damages to be reduced to the extent of Rs.25%. 4. On the other hand, learned counsel appearing on behalf of the respondents submitted that except for the balancesheets, no other corroborative evidence has been placed on record to establish the earnest and concerted efforts to overcome the losses. Rightly so the authorities noticing the ``` WP(C) NO. 29287 OF 2022 ``` ``` 5 ``` contents of the balance sheet did not take into consideration the company was actually running into losses. Once the company had the resources to make payment of the wages, no attenuating circumstances surfaced in not making the EPF contributions in time to overcome the inevitable implications of the provisions of Sections 14B and 7Q of the 1952 Act and urged this Court for upholding the orders under challenge by dismissing the writ petition. 5. I have heard the learned counsel for the parties and appraised the paper book. 6. Supreme Court in _**Horticulture Experiment Station Gonikoppal, coorg**_ (supra) after noticing the entire law on the provisions of Section 14B as well as other provisions of the Act containing the element of damages formed an opinion that there cannot be any straight jacket formula of mens rea to be blindly followed in each and every case. Since the proceedings for imposition of penalty/damages are adjudicatory in nature, in contra distinction to criminal or quasi criminal proceedings. There can always be two distinct liabilities, both civil and ``` WP(C) NO. 29287 OF 2022 ``` ``` 6 ``` criminal. Damages/penalty is directed as soon as there is a contravention of statutory obligations as contemplated by the Act or Regulation, therefore, the intention of the parties would be wholly irrelevant, and would not be determining factor. It is not the case of the petitioner that they were not aware of the consequential proceedings of imposition of damages provided under the Act on account of non-deposit of EPF contribution of the employees particularly when the wages have been paid in time. No doubt the balance-sheet reflect that the company had been running into losses and the Appellate Authority had discussed the details in paragraph 5 which reads as under: 5. In this appeal also, the learned Counsel for the appellant pleaded financial difficulties as a ground for belated remittance of payment. The appellant also produced the financial statements for the relevant period. According to the learned Counsel for the appellant, the accumulated loss of the appellant company as on 2015-16 was 54.66 crores and as on 2018-19 the accumulated loss increased to 84.38 crores. There was also a corresponding increase in operating loss for the appellant establishment. The learned Counsel for the respondent pointed out that the financial statements now produced by the appellant shall not be taken into account for deciding the quantum of damages. The Hon'ble Supreme Court of India in _**Petlad Turkey Red Dye**_ ``` WP(C) NO. 29287 OF 2022 ``` ``` 7 ``` ## _**Workers Company Limited Vs Dyes and Chemical**_ _**Workers Union and Others**_ , 1960 KHC 717, held that the current assets and liabilities as reflected in the balance sheet cannot be accepted unless the figures are proved through competent persons before court of law. The Hon'ble Supreme Court of India in management of _**Trichinopoly**_ ## _**Mills Ltd Vs National CottonTextile Mills Workers**_ _**Union**_ , AIR 1960 SC 1003, held the balance sheet does not by itself prove any facts and that the law requires that such important facts are to be proved by employer after giving an opportunity to contest the correctness of such evidence. However it is seen that the appellant was having current assets of Rs. 2.66 crores in the year ending 31.03.2015 and Rs. 2.76 crores for the year ending 31.03.2016 and Rs.2.52 crores for the year ending 31.03.2017. Further it is seen that the revenue from operation for the year ending 31.03.2015 was Rs.12.39 and for the year ending 31.03.2016, it was Rs.11.39 crores. For the year ending 31.03.2017, the revenue from operations was Rs.11.11 crores and for the year ending 31.03.2018 it was Rs. 11.54 crores. For the year ending 31.03.2019, the revenue from operation was Rs 10.42 crores. Further it is seen that the employee benefit expenses as on 31.03.2015 was Rs.11.26 crores and for 31.03.2016, it was Rs. 10.88 crores. For the year ending 31.03.2017, it was Rs.10.79 crores. And for the year ending 31.03.2018, it was Rs.11.40 crores. For the year ending 31.03.2019, it was Rs. 10.29 crores. Hence if we look at the overall financial position of the appellant establishment, though it was running on loss, there was no reason to delay the remittance of provident fund contribution. Atleast it was not an exclusive reason for the ``` WP(C) NO. 29287 OF 2022 ``` ``` 8 ``` delayed remittance of contribution. 7. The Appellate Authority found there was no reason to delay the remittance of provident fund contribution as it was not an exclusive reason for delayed remittance. This is precisely the opinion of this Court expressed during the course of hearing that as to whether any concerted efforts were being made to truncate the losses or not. I am of the view that the damages are inevitable on account of non-discharge of civil liability like non-payment of contribution in the instant case. The Appellate Authority yet accepted the appeal in part by reducing into 70%, said finding is perfectly legal and justified and do not warrant any interference while exercising power of judicial review under Article 226 of the Constitution of India. Accordingly, this writ petition is dismissed by upholding the orders impugned Since the hospital is alleged to be in possession of the respondent, I permit the petitioner to deposit the balance amount of damages assessed as per the orders of the Appellate Authority, Rs.9 lakhs an odd amount, in 18 equal ``` WP(C) NO. 29287 OF 2022 ``` ``` 9 ``` monthly instalments commencing from 15.12.2022. In case of perpetual default of two instalments, the respondents shall be at liberty to take action in accordance with law. **Sd/-** **AMIT RAWAL JUDGE** nak ``` 10 ``` ## **`WP(C) NO. 29287 OF 2022`** ## **`APPENDIX OF WP(C) 29287/2022`** ``` PETITIONER EXHIBITS ``` - `Exhibit P1 TRUE COPY OF THE BALANCE SHEET OF THE PETITIONER FOR THE YEAR 2015-16.` - `Exhibit P1(a) TRUE COPY OF THE BALANCE SHEET OF THE PETITIONER FOR THE YEAR 2016-17.` - `Exhibit P1(b) TRUE COPY OF THE BALANCE SHEET OF THE PETITIONER FOR THE YEAR 2017-18.` - `Exhibit P1(c) TRUE COPY OF THE BALANCE SHEET OF THE PETITIONER FOR THE YEAR 2018-19` ``` Exhibit P2TRUE COPY OF THE ORDER DATED 25.11.2019 PASSED BY THE 1ST RESPONDENT. Exhibit P3TRUE COPY OF THE APPEAL DATED 14.12.2019 PREFERRED BY THE PETITIONER DATED 23.12.2019 BEING APPEAL NO. 792/2019 WITHOUT ITS ENCLOSURES. ``` ``` Exhibit P4TRUE COPY OF THE REPLY STATEMENT DATED NIL FEBRUARY, 2020 FILED BY THE 1ST RESPONDENT BEFORE THE 2ND RESPONDENT IN APPEAL NO. 792/2019. Exhibit P5TRUE COPY OF THE ORDER DATED 01.03.2022 IN APPEAL NO. 792/2019 PASSED BY THE 2ND RESPONDENT TRIBUNAL. ```