M/S. TRICHUR URBAN CO-OPERATIVE BANK LTD. v. THE ASSISTANT P.F COMMISSIONER, EMPLOYEES' PROVIDENT FUND-ORGANIZATION & THE CENTRAL GOVERNMENT INDUSTRIAL TRIBUNAL/LABOUR COURT

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE AMIT RAWAL** **TUESDAY, THE 29[TH] DAY OF NOVEMBER 2022 / 8TH AGRAHAYANA, 1944** ## **WP(C) NO. 26187 OF 2022** ## **PETITIONER/S:** M/S. TRICHUR URBAN CO-OPERATIVE BANK LTD., HEAD OFFICE, MISSION QUARTERS, THRISSUR- 680001. REPRESENTED BY ITS GENERAL MANAGER MR. JEROME P THOMAS BY ADVS. TERRY V.JAMES DAVIS J.CHIRAMEL ## **RESPONDENT/S:** 1 THE ASSISTANT P.F COMMISSIONER, EMPLOYEES' PROVIDENT FUND-ORGANIZATION, REGIONAL OFFICE, 36/685A, BHAVISHYA NIDHI BHAVAN, KALOOR, KOCHI, PIN - 682017 2 THE CENTRAL GOVERNMENT INDUSTRIAL TRIBUNAL/LABOUR COURT, 8TH FLOOR, KSHB BUILDING, PANAMPILLY NAGAR ERNAKULAM- - 682036, REPRESENTING THE PRESIDING OFFICER. BY ADV SRI.SAJEEV KUMAR K. GOPAL, SC, EPFO THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 29.11.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WPC 26187/2022 2 **AMIT RAWAL, J. -----------------------------------WP(C) No.26187 of 2022 ------------------------------------Dated this the 29[th] day of November, 2022** ## **J U D G M E N T** Ext.P6 order dated 18.2.2020 of the assessing authority computing penal damages under Section 14B of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and Ext.P11 appellate order dated 1.4.2022 accepting the appeal presented on behalf of the petitioner/establishment in part by reducing the damages to 70%, are under challenge. 2. The petitioner is a Co-operative Bank registered under the Kerala Co-operative Societies Act, 1963. 3. One Mr.Jayendran, an employee of the petitioner was dismissed from service with effect from 29.9.2006. The aforementioned dismissal order was challenged before the Co-operative Arbitration Court, Thiruvananthapuram in ARC No.58/2007. Vide Ext.P3 award dated 20.5.2009, the WPC 26187/2022 3 aforementioned ARC was allowed, whereby a direction was issued to the petitioner for reinstating the said Mr.Jayendran with backwages and other service benefits. 4. The petitioner challenged the aforementioned award by preferring an appeal before the Co-operative Tribunal. Though an interim stay of the operation of the award was granted in the appeal, on 31.8.2011, the appeal was dismissed. The aforementioned orders were challenged before this Court by filing WP(C) No.34581/2011 and there was an interim order of stay of operation of the judgment of the Tribunal. However, on 10/11/2014, the writ petition was dismissed by this Court upholding the award and the judgment of the Tribunal. Writ Appeal No.39/2015 was preferred by the petitioner and an interim order of stay was granted. But, the writ appeal also stood dismissed on 16.7.2018, vide Ext.P4 judgment. 5. Thereafter, the petitioner was served with Ext.P1 notice from the office of the Employees Provident Fund Organisation intimating proposed levy of damages and WPC 26187/2022 4 interest for the period from September, 2006 to December, 2016, for the reasons of delayed payments and nonenrollment of 35 employees and also for non-remittance of contribution of regular dues. The aforementioned notice was duly replied by the petitioner. Thereafter, the first respondent passed Ext.P6 order dated 18.2.2020 levying damages amounting to Rs.18,82,460/-, which was challenged by the petitioner by filing Ext.P8 appeal before the Tribunal. In the reply (Ext.P9) filed by the respondent/Organisation to the appeal, it surfaced that damages are proposed to be levied on three counts. The first is non-payment of the contribution of Mr.Jeyendran for the period from September, 2006 to December, 2016; the second is non-enrollment of 35 daily waged employees with effect from March, 2012 to July, 2016 and the third is nonremittance of the regular dues with effect from February, 2012 to August, 2019. The appeal was partly allowed by the Tribunal vide Ext.P11 order dated 1.4.2022 by reducing the damages to 70%. WPC 26187/2022 5 6. Ext.P6 also contains assessment of interest under Section 7Q. Though the order under Section 7Q was not appealable, the petitioner preferred an appeal. The appellate Tribunal vide Ext.P11 impugned order dated 1.4.2022, reduced the amount of damages under Section 14B to the extent of 70%. 7. Learned counsel appearing on behalf of the petitioner submitted that the petitioner cannot be found faulted with in not depositing contribution in respect of a terminated employee for the period from September, 2006 to December, 2016, and therefore, there was no intentional breach of the obligation and penal provisions for the aforementioned period could not have been imposed. As regards non-enrolled employees, the petitioner had deposited the amount under Section 7A though belatedly. There was no willful default or _mens rea_ with regard to the delay caused in remittance of regular monthly dues for a period from February, 2012 to August, 2019. The order of dismissal was though upheld by the arbitration award, there WPC 26187/2022 6 was interdiction by the Tribunal, writ court and a Division Bench of this Court. 8. On the other hand, Sri.Sajeevkumar K.Gopal, learned Standing Counsel for the first respondent/Organisation, countered the argument by submitting that the penal provisions on account of breach of legal obligation are inevitable. It is not a solitary case of non-remittance of EPF contribution of a dismissed or terminated employee, but with regard to non-remittance of EPF contributions of non-enrolled 35 eligible temporary employees. Since no just and reasonable explanation is forthcoming on behalf of the petitioner/establishment by opposing the liability under Section 7A in not depositing the contribution, imposition of penal provisions were inevitable and the same has to be discharged in view of the judgment rendered by the Hon’ble Supreme Court in _**Horticulture Experiment Station Gonikoppal, Coorg v. The Regional Provident Fund Organization**_ [2022 LiveLaw SC 202]. WPC 26187/2022 7 Similar is the argument with regard to delay in remission of the contribution in respect of the enrolled employees. 9. I have heard the learned counsel for the parties and appraised the paperbook. 10. There is some force in respect of the first plea, i.e. termination of the services of Mr.Jayendran, which had been the subject matter of challenge before the competent authorities and before the writ/appellate courts, from time to time, and as noticed above, as there were interdictions, and it was not known whether the case would be decided in favour of the Management or vice versa. In that circumstances, the petitioner cannot be burdened with penal damages for non-contribution with respect to Mr.Jayendran. In other words, the predicament of both the parties was writ large. I am of the view that this fact has not been examined or pondered either by the assessing authority or the appellate authority, though the appellate authority reduced the cumulative damages assessed under the above three heads to the extent of 70%. In this view of WPC 26187/2022 8 the matter, the petitioner cannot be saddled with the liability of penal provisions of damages and interest under Sections 14B and 7Q for the period Mr.Jayendran remained out of service. Therefore, demand for the period from September, 2006 to December, 2016 is quashed. 11. As regards the other demands for non-enrolled 35 temporary employees and also for delay in remitting monthly contributions, no reasonable explanation was submitted, either before the writ court or before the assessing authority or the Tribunal. On account of default in not remitting the contribution, penal provisions are _sine qua non_ , in view of the dictum laid down by the Hon’ble Supreme Court in _**Horticulture Experiment Station Gonikoppal, Coorg** (supra)_ . In view of the aforesaid decision, this Court cannot interfere with the order initiating penal provisions under Sections 14B and 7Q of the Act with regard to non-remittance of regular monthly dues. The aforementioned demand is upheld. The writ petition is allowed in part. WPC 26187/2022 9 12. The first respondent will serve a fresh notice of demand, with respect to non-remittance of contributions of non-enrolled daily waged employees for the period from March, 2012 to July, 2016 and the delay caused in remittance of regular monthly dues for the period from February, 2012 to August, 2019 under Section 14B by calculating the same at 70% and interest under Section 7Q, within a period of one month from the date of receipt of a certified copy of this judgment. As and when such demand is received by the petitioner, it can pay the same in 18 equal monthly installments commencing from 15[th] of the following month of receipt of the demand. **Sd/AMIT RAWAL JUDGE** jg WPC 26187/2022 10 ## **APPENDIX OF WP(C) 26187/2022** PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF NOTICE DATED 5.12.2019 OF THE 2ND RESPONDENT UNDER EPF&MP ACT. (RELAVENT PAGES) Exhibit P2 TRUE COPY OF HEARING NOTE DATED 21-012020 SUBMITTED BY PETITIONER TO EXHIBITP1. Exhibit P3 TRUE COPY OF AWARD DATED 20.5.2009 IN A.R.C. NO. 58/2007 OF THE CO-OPERATIVE ARBITRATION COURT, THIRUVANANTHAPURAM. Exhibit P4 TRUE COPY OF JUDGMENT DATED 16.7.2018 IN W.A.NO. 39/2015 OF THIS HON'BLE COURT Exhibit P5 TRUE COPY OF ORDER DATED 21.11.2016 UNDER SECTION 7A OF THE EPF&MP ACT. Exhibit P6 TRUE COPY OF ORDER NO. KR/ KCH/ 13320/ PENAL DAMAGES/ 2020/ 11890 DATED 18.2.2020 UNDER SECTION 14B OF THE 1ST RESPONDENT. Exhibit P7 TRUE COPY OF COMPUTATION OF INTEREST & DAMAGES PREPARED BY THE PETITIONER. Exhibit P8 TRUE COPY OF APPEAL NO. 49/2020 DATED 19.3.2020 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT [WITHOUT ANNEXURES] Exhibit P9 TRUE COPY OF REPLY DATED JUNE 2020 FILED BY THE 1ST RESPONDENT TO THE APPEAL Exhibit P10 TRUE COPY OF REJOINDER DATED 1.10.2021 FILED BY THE PETITIONER TO THE REPLY FILED BY THE 1ST RESPONDENT. Exhibit P11 TRUE COPY OF ORDER DATED 1.04.2022 [SERVED ON . .2022 ON THE PETITIONER] OF THE 2ND RESPONDENT