The Alleppey Co-operative Spinning Mills Ltd.

# **`IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V MONDAY, THE 15[TH] DAY OF JANUARY 2024 / 25TH POUSHA, 1945 WP(C) NO. 29219 OF 2022`** ## **`PETITIONER/S:`** ``` THEALLEPPEYCO-OPERATIVESPINNINGMILLSLTD., KAREELAKULANGARAP.O.KAYAMKULAM, ALAPPUZHAPIN690572,REPBYITSGENERALMANAGER. BYADVS. LATHAANAND M.N.RADHAKRISHNAMENON S.VISHNU(ARIKKATTIL) SIDHARTHP.S. ``` ## **`RESPONDENT/S:`** ``` 1THEBOARDOFTRUSTEES, EMPLOYEESPROVIDENTFUNDORGANISATION, REPRESENTEDBYITSSECRETARY,BHAVISHYANIDHIBHAVAN, BHIKAIJICAMAPLACE,NEWDELHI,INDIA-110066. 2REGIONALPROVIDENTFUNDCOMMISSIONER, EMPLOYEESPROVIDENTFUNDORGANISATION,REGIONALOFFICE, - BHAVISHYANIDHIBHAWANKALOOR,KOCHIPIN682017. 3CENTRALGOVERNMENTINDUSTRIALTRIBUNALCUMLABOURCOURT, ERNAKULAM(APPELLATEAUTHORITYUNDEREPF&MPACT)8TH FLOOR,HOUSINGBOARDBUILDING,PANAMPILLYNAGAR, - ERNAKULAM16. BYADVSRI.SAJEEVKUMARK.GOPAL,SC,EPFO ``` ``` THISWRITPETITION(CIVIL)HAVINGCOMEUPFORADMISSION ON15.01.2024,THECOURTONTHESAMEDAYDELIVEREDTHE FOLLOWING: ``` W.P.(C). No.29219 of 2022 2 ## **JUDGMENT** ‘The Alleppey Cooperative Spinning Mills Ltd.,’ herein referred to as the petitioner, is an entity governed by the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952, along with the associated schemes framed pursuant to said Act. 2. The petitioner asserts that their operations have been significantly impacted by adverse market conditions, and they are running at a substantial loss. As a result, the petitioner is grappling with the challenge of meeting its day-to-day financial obligations due to the current precarious financial circumstances it finds itself in. 3. While so, Ext.P1 summons was issued to the petitioner by the 2nd respondent, calling upon them to pay the interest and damages for the alleged delay in payment of the contributions due to the organization. Though Ext.P2 representation was submitted, the contentions were not accepted, and Ext.P4 order was passed, levying a sum of Rs.3,71,182/- as damages by way of penalty under Section 14B of the EPF Act, 1952. 4. Challenging the said order, the petitioner is stated to have preferred an appeal before the Central Government Industrial Tribunal, W.P.(C). No.29219 of 2022 3 and by Ext.P7 order, the petitioner was ordered to remit 80% of the damages assessed as per the impugned order. 5. The aforesaid order is under challenge. 6. Smt. Latha Anand, the learned counsel appearing for the petitioner, submitted that the financial situation of the petitioner is quite precarious, and they are finding it difficult even to pay the wages to the employees. It is submitted that the above aspect of the matter was not reckoned by the Tribunal in the proper perspective. It is submitted that ordering the petitioner to pay damages would only aggravate the financial crisis that is being faced by the petitioner. 7. The learned Standing Counsel appearing for respondents 1 and 2, on the other hand, submitted that when the wages of the employees are paid, the employees share of the contribution was, in fact, deducted from the salary due to the employees. It is submitted that the financial hardship or constraint cannot be a reason for non-payment of the amount. It is further submitted that the Tribunal has taken a liberal view and has ordered the reduction of damages by 20%. 8. Section 14B of the EPF Act, 1952 says that where an employer makes default in the payment of any contribution to the Fund, the Pension Fund or the Insurance Fund or in the transfer of W.P.(C). No.29219 of 2022 4 accumulations required to be transferred by him under sub-section (2) of Section 15 or sub-section (5) of Section 17 or in the payment of any charges payable under any other provision of this Act or of any Scheme or Insurance Scheme or under any of the conditions specified under Section 17, the Central Provident Fund Commissioner or such other officer as may be authorised by the Central Government, by notification in the Official Gazette, in this behalf recover from the employer by way of penalty such damages, not exceeding the amount of arrears, as may be specified in the Scheme. However, before levying and recovering such damages, the employer shall be given a reasonable opportunity of being heard. 9. There is no case for the petitioner that they fall into the category of a sick industry and fall within the 2nd proviso to Section 14B of the Act. 10. I find that the Tribunal has appreciated all the contentions raised by the petitioner and has partly allowed the appeal by limiting the damages to 80% of the amount arrived at the Regional Provident Fund Commissioner. This Court, while exercising powers under Article 226 of the Constitution, will not be justified in re-evaluating the evidence or interfering with findings of fact made by the competent authority or the Tribunal. The jurisdiction primarily extends to W.P.(C). No.29219 of 2022 5 correcting errors of law or jurisdictional issues. Interference can also be made if it can be demonstrated that the proceedings before the competent authority or the Tribunal were conducted in violation of the principles of natural justice or if the orders of the competent authority or the Tribunal suffer from manifest illegality or are patently erroneous. In **Horticulture Experiment Station, Gonikoppal, Coorg v. RPF Organization[1]** , the Apex Court taking note of three-judge Bench judgment of this Court in **Union of India v. Dharmendra Textile Processors[2] ,** has held that default or delay in the payment of EPF contribution by the employer under the Act is a sine qua non for imposition of levy of damages under Section 14B of the Act 1952 and mens rea or actus reus is not an essential element for imposing penalty/damages for breach of civil obligations/liabilities. Having considered the entire facts, I am of the view that the petitioner has not made out any cases for interference 11. At this stage, the learned counsel appearing for the petitioner requested that the petitioner be granted an opportunity to remit the amount in installments. Taking note of the impecunious circumstances plaguing the petitioner, I am of the view that the petitioner can be directed to pay the amounts due to the respondent in > 2 (2008) 13 SCC 369 > 1 (2022) 4 SCC 516 W.P.(C). No.29219 of 2022 6 installments. ## 12. Resultantly, this writ petition is ordered, and the following directions are issued: - (i) The petitioner shall approach the 2nd respondent with a request to inform them of the details of the amount together with interest. If such a request is made within two weeks from the date of receipt of a copy of this judgment, the 2nd respondent shall forthwith issue a statement in writing detailing the amounts due. - (ii) On receipt of such a statement, the petitioner shall pay the amount shown therein in ten (10) equal monthly installments commencing from 15.3.2024 and continue to pay the same on the 15th of every succeeding month thereafter until the entire dues are wiped out. - (iii) If the amounts are diligently paid in terms of the directions above, coercive proceedings initiated against them by the respondents for the realization of the amount shall be kept in abeyance. - (iv) It is made clear that if the petitioner commits default of any two successive installments, they W.P.(C). No.29219 of 2022 7 will lose the benefit of this judgment, and the concerned respondents will be free to continue the recovery proceedings against them from the stage at which they presently stand and recover the entire amount along with interest and other charges. This writ petition is disposed of. Sd/- **RAJA VIJAYARAGHAVAN V, JUDGE** NS W.P.(C). No.29219 of 2022 8 ## **`APPENDIX OF WP(C) 29219/2022`** ``` PETITIONEREXHIBITS ``` ``` ExhibitP1TRUECOPYOFSUMMONSDATED29.07.2019 ISSUEDBYTHE2NDRESPONDENTTOTHE PETITIONER. ExhibitP2TRUECOPYOFTHEREPRESENTATIONDATED 22.08.2019SUBMITTEDBYTHEPETITIONER BEFORETHE2NDRESPONDENT. ExhibitP3TRUECOPYOFSTATEMENTREGARDINGTHEPROFIT ANDLOSSACCOUNTFROM1999-2018. ExhibitP4TRUECOPYOFTHEORDERDATED2.12.2019OF THE2NDRESPONDENT. ExhibitP5TRUECOPYOFAPPEALNO.20/2020FILED BEFORETHE3RDRESPONDENT. ExhibitP6TRUECOPYOFTHEREPLYTOTHEAPPEALNO.20 OF2020. ExhibitP7TRUECOPYOFTHEORDEROFTHEAPPELLATE TRIBUNALDATED06.04.2022INAPPEALNO. 26/20. ```