Sree Narayana Trust Medical Mission and Sankar Sashtyabdapoorthi Memorial (S.S.M) Hospital, Kollam v. Union of India and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE MURALI PURUSHOTHAMAN THURSDAY, THE 2[ND] DAY OF DECEMBER 2021 / 11TH AGRAHAYANA,** ## **1943** ## **WP(C) NO. 7692 OF 2012** ## **PETITIONER:** **M/S.SREE NARAYANA TRUST MEDICAL AGED 75 YEARS MISSION AND SANKAR SASTHYABDAPOORTHI MEMORIAL (S.S.M) HOSPITAL, KOLLAM, KERALA STATE, REPRESENTED BY ITS CHAIRMAN SRI. VELLAPALLY NATESAN** **BY ADVS. SRI. A.N. RAJAN BABU SRI. P. GOPALAKRISHNAN MVA** ## **RESPONDENTS:** **1 UNION OF INDIA REPRESENTED BY ITS SECRETARY, MINISTRY OF LABOUR, GOVERNMENT OF INDIA, NEW DELHI – 110 001. 2 REGIONAL PROVIDENT FUND COMMISSIONER KOLLAM EMPLOYEES PROVIDENT FUND ORGANISATION, SUB REGIONAL OFFICE, MANNANMA COMPLEX, ANANDMUKKOM, CHINNAKKADA, KOLLAM - 691 001. KERALA. BY ADVS. SRI. P. VIJAYAKUMAR, ASG OF INDIA R2 - SRI. PIRAPPANCODE V.S.SUDHIR SRI. P. PARAMESWARAN NAIR ASG OF INDIA SRI. S. MANU** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON** **02.12.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **WP(C).No.7692 OF 2012** **2** ## **JUDGMENT** The petitioner, Sree Narayana Trust Medical Mission and Sankar Sashtyabdapoorthi Memorial (S.S.M) Hospital, an institution under the Sree Narayana Trust, Kollam is covered under the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 (for short, 'the Act') and Schemes framed thereunder from the year 1973. Since there was a shortfall of remittance of contribution made in respect of a section of employees during the period from April, 2004 to March, 2007, an enquiry under Section 7A of the Act was initiated and the petitioner was directed to remit an amount of Rs.36,81,830.45. Against the said order, the petitioner preferred a review under Section 7B of the Act. The review petition was allowed in part by Ext.P1 and the amount was reduced to Rs.27,24,064.15. The petitioner remitted the entire amount in 20 installments. Later, Ext.P2 proceedings was initiated against the petitioner by the 2[nd] respondent levying damages under Section 14B of the Act to the tune of Rs.13,69,803/- and an interest of Rs.4,60,467/- under Section 7Q of the Act. Aggrieved by the levy of damages under **WP(C).No.7692 OF 2012** **3** Section 14B by Ext.P2 proceedings, the petitioner preferred Ext. P3 appeal before the Appellate Tribunal and the Appellate Tribunal by Ext.P5 order dismissed the appeal. Ext. P5 order was challenged before this Court in W.P (C) No.3491 of 2012 and this Court, by Judgment dated 29-02-2012, held that Exts.P2 and P5 orders are passed without following the principles laid down in the decision of this Court in **Indian Telephone Industries Ltd. v. Assistant Provident Fund Commissioner and others** [2006 (3) KLJ 698] and set aside the same and the 2[nd] respondent was directed to pass revised orders under Section 14B of the Act after affording an opportunity of hearing to the petitioner. 2. According to the petitioner, the proceedings pursuant to Exts.P2 and P5 were re-considered by the 2[nd] respondent and reduced the damages by 70% and the same has become final. 3. Ext.P2 covered only proceedings under section 14B for belated remittance of Employees Provident Fund contributions, since at that time no amounts were remitted by the petitioner under the heads administrative/inspection charges, the family pension, deposit link insurance fund contributions etc., other than **WP(C).No.7692 OF 2012** **4** the Employees Provident Fund contributions. On the belated remittance of amounts under the heads administrative/inspection charges, the family pension, deposit link insurance fund contributions etc, the 2[nd] respondent initiated fresh proceedings under Section 14B and issued Ext.P6 proceedings levying damages. Ext.P6 proceedings is impugned in this writ petition. The amount levied as damages under Section 14B is Rs.9,88,858/-. The petitioner remitted an amount of Rs.5,88,858/- and the balance amount to be remitted pursuant to Ext.P6 is Rs,4,00,000/-. After remitting the said amount of Rs.5,88,858/-, the petitioner has approached this Court by filing the writ petition contending that Ext.P6 order has been passed without application of mind and in total violation of the provisions under Section 14B and the scheme framed under the Act. According to the learned counsel for the petitioner, mere delay in payment of contribution does not entail levy of damages under Section 14B and that Ext.P6 is a non-speaking order. Accordingly, Ext.P6 is sought to be quashed. 4. A counter affidavit has been filed on behalf of the 2[nd] respondent, wherein, it is stated that Ext. P6 order has been **WP(C).No.7692 OF 2012** **5** passed strictly in accordance with the provisions under Section 14B of the Act and being a welfare legislation, Section 14B has been incorporated in the Act and that the petitioner failed to remit the statutory dues within the statutorily prescribed period and therefore they are liable to pay damages under Section 14B. It is also pointed out that the petitioner had already remitted an amount of Rs.5,88,858/- in three installments and therefore cannot challenge Ext.P6. 5. Heard the learned counsel for the petitioner and the learned counsel for the respondents. 6. According to the petitioner, Ext. P2 order is vitiated by non-application of mind. The learned counsel contends that mere belated payment of contribution does not attract levy of damages and the order should reflect that the 2[nd] respondent has applied his mind with the facts of the case. Ext. P2 order does not contain any reason as to why damages shall be levied on the petitioner as the levy of damages is not automatic. The learned counsel also relied on the decision in **Indian Telephone Industries Ltd. v. Assistant Provident Fund Commissioner and others** [2006 (3) KLJ 698]. **WP(C).No.7692 OF 2012** **6** 7. Sri.Pirappancode V. S.Sudhir, the learned counsel for the 2[nd] respondent would contend that Ext.P2 order is passed strictly in accordance with the provisions under Section 14B and all the conditions for imposing penalty has been followed and that the order was passed after hearing the representative of the petitioner. Since the petitioner did not make the contributions within the statutorily stipulated period, the damages under Section 14B was imposed. It is also contended by the learned counsel for the 2[nd] respondent that the petitioner had already remitted three installments pursuant to Ext. P6 order and the petitioner having remitted major portion of the amount covered by Ext. P2 cannot now turn round and challenge Ext. P2 as the petitioner cannot “approbate and reprobate” at the same time. The learned counsel also relied on the decision of this Court in **Union of India and Others** _**v**_ **. N.Murugesan etc.** (judgment dated 07.10.2021 in Civil Appeal Nos.2491-2492 of 2021), wherein, the Supreme Court has elaborately discussed the doctrine of “approbate and reprobate” and has held that the principle of “approbate and reprobate” is a species of estoppel and the person shall not be permitted to “blow hot and cold” at **WP(C).No.7692 OF 2012** **7** the same time. Relying on the said decision, the learned counsel for the 2[nd] respondent contends that the petitioner having accepted Ext.P6 order and paid a major portion of the amount demanded is estopped from challenging Ext.P6 before this Court. 8. Sri. A.N. Rajan Babu, the learned counsel for the petitioner would refer to his pleadings in paragraph 15 of the writ petition and would submit that the petitioner was forced to remit a portion of the amount levied as damages in Ext. P6 to avoid coercive steps by the 2[nd] respondent by attaching the bank account of the hospital and that the remittance of a portion of the amount would not preclude the petitioner from challenging Ext.P6 order before this Court. 9. I have considered the rival contentions. On going through Ext. P6, I find that, though it has been stated in Ext. P6 that the 2[nd] respondent has applied his mind to all the relevant facts, the order does not reflect that there is proper application of mind to the facts of the case. As rightly submitted by the learned counsel for the petitioner, the levy of damages under Section 14B of the Act is not automatic. This Court, in **Indian Telephone Industries Ltd.** (supra), has laid down certain **WP(C).No.7692 OF 2012** **8** principles while levying damages under Section 14B. This Court held therein that mere belated payment of contribution does not attract levy of damages. It was held that though liability to pay contribution is statutory, to hold that delay automatically attracts damages would be too rigid the way of construing Section 14B, especially since imposition of damages is punitive in nature. The Court held that before levying damages, the authority must take into account the reasons for the delay and consider whether the delay could have been avoided by ordinary diligence of the employee. It was held that one cannot with any certainty say what are the circumstances which would mitigate the damages and which would not, that it would differ from case to case which requires exercise of judicial discretion by the authority imposing damages by application of mind to the circumstances pleaded and proved by the defaulting employer. 10. Therefore, in the light of the dictum laid down in Indian **Telephone Industries Ltd.** (supra), I find that there is total non-application of mind on the part of the 2[nd] respondent in passing Ext.P6 order. Ext. P6 is in the form of a cyclostyled order. In **Standard Furniture, Calicut** _**v**_ **. Registrar, EPF** **WP(C).No.7692 OF 2012** **9** **Appellate Tribunal and others** [2020 (3) KHC 793], a Division Bench of this Court had cautioned the authorities exercising powers under Section 14B of the Act from passing orders using standard printed forms especially when they exercise quasijudicial functions. The Court held that various factors have to be adjudicated before levying penalty under Section 14B and therefore printed forms are unsuited for the purpose. The Court also directed the Employees Provident Funds Authorities to ensure that the practice of using printed standard forms to issue orders under Section 14B of the Act is stopped forthwith. It is trite that levy of damages under Section 14B is not automatic. All circumstances which led to the delay in remitting the Provident Fund contribution, mitigating circumstances, existence of _mens rea_ or _actus reus_ to contravene a statutory provision etc. have to be considered by the authorities before levying damages under Section 14B. Such adjudication cannot be done in a cyclostyled form or manner. Further, the recital in the order 'I have applied my mind to all relevant facts' without actual application of mind to the facts of the case and the relevant materials, will not make the same a reasoned order as required in law. Ext.P6 order is **WP(C).No.7692 OF 2012** **10** vitiated by non-application of mind. 11. With regard to the contention that since the petitioner had already remitted a portion of the amount covered by Ext.P6 order and therefore he cannot challenge Ext. P6 order, I find that, the decision relied on by the petitioner in **Union of India and Others** _**v**_ **. N.Murugesan** (supra) cannot have any application to the facts of the case at hand. In the said case, the petitioner was issued with an order of appointment by the Ministry of Power and pursuant to the said order of appointment which was for a particular tenure, the petitioner joined service without any demur and when the period of appointment was about to expire, he raised a contention that he should be treated as a regular employee and therefore should be permitted to continue till the date of his superannuation. The Apex court held that having accepted the employment for a particular period as stipulated in the order of appointment, the petitioner cannot later turn round and contend that he should be treated as a regular employee which would amount to “approbate and reprobate” at the same time and the respondent in the said case was estopped from raising any such contention. The facts of the said case and the **WP(C).No.7692 OF 2012** **11** law laid down therein cannot have any application to the facts of this case as the petitioner under the threat of coercive steps have remitted a portion of the amount and has approached this Court challenging Ext. P6 and this Court by an interim order has stayed the remittance of further amount. Therefore, the petitioner cannot be restrained from challenging Ext. P6 on the ground that the petitioner has remitted a portion of the amount covered by Ext. P6. 12. Since I have found that Ext.P6 order is vitiated by nonapplication of mind, there will be a direction to the 2[nd] respondent to pass fresh orders under Section 14B of the Act, after affording an opportunity of hearing to the petitioner and also following the principles laid down by this Court in the decision in **Indian Telephone Industries Ltd.** (supra) within a period of three months from the date of receipt of a copy of this judgment. The writ petition is allowed to the said extent. ## **Sd/-** **MURALI PURUSHOTHAMAN JUDGE** SPR **WP(C).No.7692 OF 2012** **12** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** **EXT.P1:TRUE COPY OF ORDER DATED 17.3.2008 ISSUED BY THE 2ND RESPONDENT.** - **EXT.P2:TRUE COPY OF THE ORDER NO.KR/3230/KLM/PD/10-11/8791 DATED 2.6.2010 ISSUED BY THE 2ND RESPONDENT.** - **EXT.P3:TRUE COPY OF THE APPEAL MEMORANDUM ATA NO.556(7) OF 2010 FILED BY THE PETITIONER BEFORE APPELLATE TRIBUNAL.** - **EXT.P4:TRUE COPY OF THE ORDER DATED 8.9.2010 IN ATA NO.556/2010 PASSED BY THE APPELLATE TRIBUNAL.** **EXT.P5:TRUE COPY OF THE ORDER DATED 4.2.2011 IN ATA NO.556(7) OF 2010 ISSUED BY THE APPELLATE TRIBUNAL.** - **EXT.P6:TRUE COPY OF THE ORDER KR/KLM/3230/PD/2011-12 DATED 11.11.2011 ISSUED BY 2ND RESPONDENT.**