High Court of KeralaSingle Judge2022-12-07Writ petitions disposed of; three petitions all...

WP(C) Nos. 5845/2011; 6525/2011; 6582/2011 — Sarabhai Institute of Science & Technology (SIT) v. Assistant Provident Fund Commissioner; Soft Land India Ltd. v. Assistant Provident Fund Commissioner; Sree Avittom Thirunal Hospital Health Education Society v. Assistant Provident Fund Commissioner

Case / Petition Number:WP(C) Nos. 5845/2011; 6525/2011; 6582/2011

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: P. V. Kunhikrishnan
Judgment Date: 2022-12-07
Court Decision / Holding: The Court disposed of the three writ petitions by a common judgment. WP(C) No. 6582/2011, WP(C) No. 6525/2011, and WP(C) No. 5845/2011 are each allowed in part, with Exts. P3 and Exts. P2 set aside as applicable. The assessing authority is directed to reconsider the matter in light of the Harrisons Malayalam ruling and pass appropriate orders consistent with the amended Section 14B, the sliding scale under paragraph 32A, and Section 7Q, after considering mitigating circumstances. The intent is to align the assessment with the amended regime rather than the pre-amendment jurisprudence.
Final Disposition: Writ petitions disposed of; three petitions allowed in part; Exts P2 and P3 set aside; directing reassessment by the assessing authority in light of Harrisons Malayalam and the amended regime.

Parties to the Case

Appellants / Petitioners

M/S Sarabhai Institute of Science & Technology (SIT), Uriyacode, Vellanad, Thiruvananthapuram-695543; Represented by its Secretary, K.R. Kaimal
M/S Soft Land India Ltd., St. Xavier's College, Thumba P.O., Thiruvananthapuram; Represented by its Managing Director, G. Murali
M/S Sree Avittom Thirunal Hospital Health Education Society, Sat Hospital, Medical College P.O., Thiruvananthapuram; Represented by its Secretary cum Treasurer & Superintendent, Dr. G.M. Ashok Kumar

Respondents

Assistant Provident Fund Commissioner, EPFO, Bhavishyanidhi Bhavan, Pattom, Thiruvananthapuram-695004

Legal Representation & Advocates

Counsels for Petitioners

• Sri. G. P. Shinod; Sri. Ram Mohan G.

Counsels for Respondents

• Smt. Nita N.S. (SC-EPF); Sri. N.N. Sugunapalan (SC-EPF); Smt. T.N. Girija (SCEP Organisation)

Case Synopsis & Summary

These three connected writ petitions challenge remand orders issued by the Appellate Authority under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, directing that the liability under Section 14B be assessed at 22%. The petitioners contend that the appellate remand did not apply the binding dictum of this Court in Regional Provident Fund Commissioner v. Harrisons Malayalam Ltd. (2013 KHC 3331), which clarifies the amended regime under Section 14B and the interplay with Section 7Q and the sliding scale. The respondents submit that the appellate orders reducing liability to 22% are proper and require no interference. The Court recalls that Harrisons Malayalam explains the amended regime removes the compensatory element and introduces automatic interest under Section 7Q, while leaving discretionary damages within the scheme and subject to paragraphs 32A, with mitigating circumstances to be considered. The judgment disposes of the petitions by allowing them in part, setting aside Exts. P2/P3, and directing the assessing authority to reconsider the matters in light of Harrisons Malayalam, i.e., to reassess the liability in accordance with law and the amended framework.

Provisions of Law Cited

Section 14B, Employees' Provident Funds and Miscellaneous Provisions Act, 1952Section 7Q, Employees' Provident Funds and Miscellaneous Provisions Act, 1952Paragraph 32A of the sliding table under the Employees' Provident Fund Scheme

Legal Doctrines & Maxims

Amendment to Section 14B removed compensatory element and disallowed discretionary power to impose damages; automatic imposition of interest under Section 7Q.
Discretion to levy damages under Section 14B must be exercised with mitigating circumstances within statutory limits (sliding scale under paragraph 32A).
Discretion to impose damages cannot be fettered by subordinate legislation (as reflected in ESI Corporation v. HMT Limited).
What the amendment to Section 14B intends is to remove the compensatory element and restrict discretion, with automatic interest under Section 7Q.

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioners submit that the appellate authority failed to apply the binding dictum in Harrisons Malayalam Ltd. and others (2013 KHC 3331) while determining the liability under Section 14B. They argue that the 2008 amendments to Section 14B removed the compensatory element and mandated automatic interest under Section 7Q, curbing the discretionary power to levy damages and requiring the assessing authority to follow the amended regime, including the sliding scale under paragraph 32A and mitigation. They request setting aside the remand and directing the assessing authority to determine liability consistent with Harrisons Malayalam’s doctrine.

Contentions of Respondents

The respondents contend that there is no basis to interfere with the impugned appellate remands; the liability has already been reduced to 22%, and the petitions are without merit. They maintain that the remand orders align with pre-existing decisions and the statutory framework which governed these cases.

Cited Precedents (5)

Case Name	Citation	Treatment	Explanation
Regional Provident Fund Commissioner v. Harrisons Malayalam Ltd. and others	2013 KHC 3331	Positive	Cited as the controlling doctrine embedding the amended Section 14B framework and the removal of compensatory element; the court applies this dictum to direct reassessment.
Organo's case (supra)	Organo's case (supra)	Distinguished	The judgment states that Organo’s case will not strictly apply following the amendment to Section 14B.
Hindustan Times (supra)	Hindustan Times (supra)	Distinguished	Hindustan Times is not strictly applicable post-amendment as per Harrisons Malayalam.
HMT Limited (supra)	HMT Limited (supra)	Positive	Used to illustrate the relationship between Hindustan Times and the amended regime; supports the conclusion in Harrisons Malayalam.
ESI Corporation v. HMT Limited	ESI Corporation v. HMT Limited	Positive	Cited to support the principle that discretion to levy damages cannot be fettered by subordinate legislation.

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Extracted Judgment Text

Exact text extracted from official judgment records.

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE P.V.KUNHIKRISHNAN WEDNESDAY, THE 7[TH] DAY OF DECEMBER 2022 / 16TH AGRAHAYANA, 1944** **WP(C) NO. 5845 OF 2011** ## **PETITIONER:** M/S.SARABHAI INSTITUTE OF SCIENCE & TECHNOLOGY (SIT), URIYACODE, VELLANAD,, THIRUVANANTHAPURAM-695 543, REPRESNTED BY ITS SECRETARY, K.R.KAIMAL. BY ADVS. SRI.G.P.SHINOD SRI.RAM MOHAN.G. ## **RESPONDENT:** ASSISTANT PROVIDENT FUND COMMISSIONER E.P.F.O., BHAVISHYANIDHI BHAVAN, PATTOM, THIRUVANANTHAPURAM-695 004. BY ADVS. SMT.NITA.N.S., SC - EPF SRI.N.N. SUGUNAPALAN, SC, P.F. SMT.T.N.GIRIJA SCEPF ORGANISATION THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 07.12.2022, ALONG WITH WP(C).6525/2011, 6582/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: 2 WP(C) Nos. 5845, 6525 & 6582/2011 ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE P.V.KUNHIKRISHNAN WEDNESDAY, THE 7[TH] DAY OF DECEMBER 2022 / 16TH AGRAHAYANA, 1944** **WP(C) NO. 6525 OF 2011** ## **PETITIONER:** M/S. SOFT LAND INDIA LTD., ST.XAVIER'S COLLEGE, THUMBA P.O., THIRUVANANTHAPURAM, REP. BY ITS MANAGING DIRECTOR, G.MURALI. BY ADVS. SRI.G.P.SHINOD SRI.RAM MOHAN.G. ## **RESPONDENT:** ASSISTANT PROVIDENT FUND COMMISSIONER E.P.F.O., BHAVISHYANIDHI BHAVAN, PATTOM, THIRUVANANTHAPURAM-4, 695004. BY ADVS. SMT.NITA.N.S., SC - EPF SRI.N.N. SUGUNAPALAN, SC, P.F. SMT.T.N.GIRIJA SCEPF ORGANISATION THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 07.12.2022, ALONG WITH WP(C).5845/2011 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: 3 WP(C) Nos. 5845, 6525 & 6582/2011 ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE P.V.KUNHIKRISHNAN WEDNESDAY, THE 7[TH] DAY OF DECEMBER 2022 / 16TH AGRAHAYANA, 1944** ## **WP(C) NO. 6582 OF 2011** ## **PETITIONER:** M/S.SREE AVITTOM THIRUNAL HOSPITAL HEALTH EDUCATION SOCIETY, SAT HOSPITAL, MEDICAL COLLEGE P.O., THIRUVANANTHAPURAM, REPRESENTED BY ITS SECRETARY CUM TREASURER & SUPERINTENDENT, DR.G.M.ASHOK KUMAR. BY ADVS. SRI.G.P.SHINOD SRI.RAM MOHAN.G. ## **RESPONDENT:** ASSISTANT PROVIDENT FUND COMMISSIONER E.P.F.O.BHAVISHYANIDHI BHAVAN, PATTOM, THIRUVANANTHAPURAM-695 004. BY ADVS. SMT.NITA.N.S., SC - EPF SRI.N.N. SUGUNAPALAN, SC, P.F. SMT.T.N.GIRIJA SCEPF ORGANISATION THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 07.12.2022, ALONG WITH WP(C).5845/2011 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) Nos. 5845, 6525 & 6582/2011 4 ## **P.V.KUNHIKRISHNAN, J.** **-----------------------------W.P.(C).Nos. 5845, 6525 and 6582 of 2011 ---------------------------------------------Dated this the 07[th] day of December, 2022** ## **JUDGMENT** These three writ petitions are connected and therefore, I am disposing of these three writ petitions by a common judgment. 2. Petitioners in these writ petitions are suffered by an order of damages under Section 14B of the Provisions of Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (for short 'Act'). The petitioners filed separate appeal before the appellate authority and the appellate authority as per the impugned orders remanded the matter to the assessing authority to assess the liability @ 22%. The remand orders are challenged in these writ petitions. 3. Heard counsel appearing for the petitioners and the Standing counsel appearing for the respondent. 5 WP(C) Nos. 5845, 6525 & 6582/2011 4. The main contention of the petitioners is that the appellate authority has not considered the dictum laid down by this Court in _**Regional Provident Fund Commissioner v. Harrisons malayalam Ltd. and others**_ [2013 KHC 3331] while assessing the liability. The Standing counsel appearing for the respondent submitted that, there is nothing to interfere with the impugned orders and the appellate authority already reduced the liability to 22%. 5. This Court considered the contentions of the petitioners and the respondent. In all these cases, the appellate authority remanded the case to the assessing authority to assess the liability @ 22%. All the decisions passed by the appellate authority are before the decision in _**Harrisons malayalam** 's_ case _(supra)._ In _**Harrisons malayalam** 's_ case _(supra)_ , this Court observed like this: _“22. We are of the definite opinion that the amendment definitely provided substantial changes in the scope and content of Section 14B and the decision in_ WP(C) Nos. 5845, 6525 & 6582/2011 6 _Organo's case (supra) and Hindustan Times (supra) will not strictly apply. The decision in HMT Limited (supra) has distinguished the decision in Hindustan Times (supra) to come to the above conclusion. In such circumstances, we find that what has been effectively intended by the amendment to Section 14B is to take out the compensatory element and disrobe the authority of any discretion with respect to that and provide automatic imposition of interest by Section 7Q. Under Section 14B, the authorised officer necessarily has a discretion to impose damages, by way of penalty or not to impose it altogether. In the circumstance of a finding that penalty has to be imposed, then, the authorised officer has to go to the Scheme; more specifically paragraph 32A of the sliding table provided thereunder, which is in the manner of guidelines._ _23. Going by the specific words employed in paragraph 32A again, the officer has to exercise his discretion while looking at the mitigating circumstances, which includes financial difficulties projected by an employer and the quantum to be imposed has to be decided. The only fetter is on the upper limit of rates provided in Section 14B and the table under paragraph 32A. The discretion granted by the enactment under Section 14B to the authorized officer to either levy or not to levy penalty cannot be fettered by a provision in the subordinate legislation, (ESI Corporation v. HMT Limited). We also notice that while the sliding table under paragraph 32A provided for the rate of damages for various periods as 17, 22, 27 and 37 the same was_ WP(C) Nos. 5845, 6525 & 6582/2011 7 _amended with effect from 26.9.2008, reducing it to 5,10, 15 and 25. This reduction by 12 is again a confirmation of the intention of the legislature of compensatory element being taken out of Section 14B. Though higher rates were provided under paragraph 32A initially, latter it was noticing the automatic levy of 12% under Section 7Q, that, the reduction was brought in.”_ 6. Since the matter is remanded to the assessing authority, I think the direction by the appellate authority to assess @ 22% also can be set aside and the assessing authority can be directed to consider the matter in the light of the dictum laid down by this Court in _**Harrisons malayalam** 's_ case _(supra)_ . I make it clear that the assessing authority is free to pass appropriate orders in accordance to law. I only make it clear that the assessing authority will consider the dictum laid down by this Court and find out whether the same is applicable to the facts and circumstances of these cases. Therefore, these writ petitions are disposed of in the following manner: i) W.P.(C)No.6582/2011 is allowed in part 8 WP(C) Nos. 5845, 6525 & 6582/2011 and Ext.P3 is set aside. The assessing authority is directed to reconsider the matter as directed by the appellate authority in the light of the decision in _**Harrisons malayalam** 's_ case _(supra)_ . ii) W.P.(C)No.6525/2011 is allowed in part and Ext.P2 is set aside. The assessing authority is directed to reconsider the matter as directed by the appellate authority in the light of the decision in _**Harrisons malayalam** 's_ case _(supra)_ . iii) W.P.(C)No.5845/2011 is allowed in part and Ext.P2 is set aside. The assessing authority is directed to reconsider the matter as directed by the appellate authority in the light of the decision in _**Harrisons malayalam** 's_ case _(supra)_ . Sd/- DM **P.V.KUNHIKRISHNAN JUDGE** 9 WP(C) Nos. 5845, 6525 & 6582/2011 ## **APPENDIX OF WP(C) 6525/2011** PETITIONER EXHIBITS EXHIBIT P1 A TRUE COPY OF THE ORDER NO. KR/16590/RO/TVM/PD/NS/2009 DATED 25.11.2009 PASSED BY THE RESPONDENT. EXHIBIT P2 A TRUE COPY OF THE ORDER DATED 13.01.2011 OF THE EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL, NEW DELHI IN ATA NO.403(7)/2010. EXHIBIT R1(A) TRUE COPY OF THE CALCULATION SHEET OF PROVIDENT FUND DUES. 10 WP(C) Nos. 5845, 6525 & 6582/2011 ## **APPENDIX OF WP(C) 6582/2011** PETITIONER EXHIBITS EXHIBIT P1 A TRUE COPY OF THE LETTER NO. KR/16904/ENF.I(1)/2007 DATED 05.06.2007 INTIMATING THE WAIVER OF EMPLOYEE SHARE OF CONTRIBUTION FOR THE PRE DISCOVERY PERIOD EXHIBIT P2 A TRUE COPY OF THE ORDER NO. KR/16904/RO/TVM/PD/NS/2010 DATED 15.04.2010 PASSED BY THE RESPONDENT. EXHIBIT P3 A TRUE COPY OF THE ORDER DATED 12.01.2011 OF THE EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL, NEW DELHI IN ATA NO. 289(7)/2010. 11 WP(C) Nos. 5845, 6525 & 6582/2011 ## **APPENDIX OF WP(C) 5845/2011** PETITIONER EXHIBITS EXHIBIT P1 A TRUE COPY OF THE ORDER NO. KR/22173/RO/TVM/PD/NS/2009 DATED 31.11.2009 PASSED BY THE RESPONDENT EXHIBIT P2 A TRUE COPY OF THE ORDER DATED 13.01.2011 OF THE EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL, NEW DELHI IN ATA NO. 6(7)/2010. EXHIBIT R(A) TRUE COPY OF THE LETTER NO.SIS/EPF/142/09 DT.5.11.09 EXHIBIT R(B) TRUE COPY OF THE CALCULATION SHEET //TRUE COPY// PA TO JUDGE