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SUPREME COURT OF INDIA
T.S. THAKUR, VIKRAMAJIT SEN, JJ.
MCLEOD RUSSEL INDIA LIMITED – APPELLANT
vs
REG. PROVIDENT FUND COMMISSIONER, JALPAIGURI & ORS. – RESPONDENTS
CIVIL APPEAL No. 5927 OF 2014 [Arising out of SLP(C) No.7704 of 2008]
Decided On : 02-07-2014
1984 (Supp) SCC 610; (1979) 4 SCC 573 – Relied upon
(b) Administration of Justice – Appeals – Unless the order/judgment appealed against is manifestly perverse, appellate authority should not substitute their perspective of discretion on that of the lower Adjudicatory Authority. (Para 8)
(2008) 3 SCC 35 – Referred
© Employees' Provident Funds and Miscellaneous Provisions Act, 1952 – Section 14B and sections 14, 14A, 14AA, 14AB and 14AC – Sections 14, 14A, 14AA, 14AB and 14AC postulate prosecution – Applicable only to actual perpetrator – Liability cannot be transferred – Section 14B contemplates recovery of damages – Can be effected from successor. (Para 10)
(d) Employees' Provident Funds and Miscellaneous Provisions Act, 1952 – Section 14B and 17B – Contention that liability u/s 14B is not transferable by virtue of section 17B – Section 17B does not bar transfer of liability to the successor – Rather it restricts and/or limits liability of transferee up to the date of the transfer to the value of the assets transferred. (Para 11)
(e) Employees' Provident Funds and Miscellaneous Provisions Act, 1952 – Section 14B – Damages – Recoverable jointly and severally from erstwhile as well as the current managements. (Para 12)
Facts of the case:
M/s. Mathura Tea Estate, P.O. Mathura Bagan, District Jalpaiguri, West Bengal, owned by Saroda Tea Company Ltd., indubitably an establishment covered by the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, had defaulted in remitting the contributions and accumulations payable under the EPF Act and the sundry Schemes formulated under that statute. It was in those circumstances that the Regional Provident Fund Commissioner, Jalpaiguri, West Bengal, had issued notices to M/s. Mathura Tea Estate enabling it to show cause against the imposition of 'damages' as envisaged under Section 14B of the EPF Act.
M/s. Mathura Tea Estate requested for a waiver of damages, which was rejected. In the duration of those proceedings, the management of M/s. Mathura Tea Estate was taken over by Eveready Industries (India) Ltd, which thereafter discharged the liability of entire principal sum of Provident Fund dues to the tune of Rs.75,76,000/- pertaining to the period prior to the takeover.
Eveready Industries (India) Ltd. Contended before the RPF Commissioner, Jalpaiguri that proceedings under Section 14B of the EPF Act against it were unjustified as it was not the "employer" defined under Section 2(e) of the EPF Act, which defaulted in paying contributions. The RPF Commissioner has recorded that M/s. Mathura Tea Estate had defaulted in payment of dues for the period from March, 1989 to February, 1998. It held that on a conjoint reading of Sections 14B and 17B of the EPF Act it was clear that damages under Section 14B were recoverable jointly and severally from Saroda Tea Company Ltd. As well as Eveready Industries (India) Ltd. The damages were assessed at Rs.70,37,950; and it was further directed that failure to deposit penal damages within the stipulated period would attract the provisions of Section 7Q of the EPF Act, thereby enhancing the liability to include simple interest at the rate of 12 per cent per annum on the damages.
Single Judge of the High Court set aside the Commissioner's Orders and directed the said Authority to reconsider the issues.
The Division Bench reversed the said judgment and order.
Finding of the Court:
The Appellant-Petitioner has been also rightly burdened with the payment of interest under Section 7Q of the EPF Act.
Result: Appeal dismissed.
JUDGMENT
VIKRAMAJIT SEN,J.
1. Leave granted.
2. This Appeal assails the judgment of the Division Bench of the High Court at Calcutta which had allowed the Appeal preferred against the judgment of the learned Single Judge, who in turn had applied and implemented the opinion of the Division Bench as expressed in Darjeeling Dooars Plantation Ltd. vs Regional Provident Fund Commissioner, 1995 ILLJ 939 Cal. In the impugned Order, the present Division Bench had the advantage of perusing the view taken by a Special Bench of three learned Judges of the Calcutta High Court in Dalgaon Agro Industries Ltd. vs Union of India, (2006) 1 CALLT 32 (HC), which was decided on 24.06.2005.
The Special Bench was constituted in view of a reference submitted by a Single Judge in Writ Petition No. 16037(W), who had entertained an opinion which differed with three earlier decisions rendered by Single Judges in three separate matters. Along with the aforestated writ petition, an appeal pending before a Division Bench against one of those Single Judge decisions was also taken up by the Special Bench. In this Appeal, therefore, we have primarily to consider whether the exposition of law by the Special Bench in Dalgaon Agro Industries Ltd. is the logical and acceptable view.
3. The factual matrix obtaining in the case at hand, succinctly stated, is that M/s. Mathura Tea Estate, P.O. Mathura Bagan, District Jalpaiguri, West Bengal, owned by Saroda Tea Company Ltd., indubitably an establishment covered by the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 ('the EPF Act' for brevity), had defaulted in remitting the contributions and accumulations payable under the EPF Act and the sundry Schemes formulated under that statute. It was in those circumstances that the Regional Provident Fund Commissioner ('RPF Commissioner' for brevity), Jalpaiguri, West Bengal, had issued notices to M/s. Mathura Tea Estate enabling it to show cause against the imposition of 'damages' as envisaged under Section 14B of the EPF Act.
M/s. Mathura Tea Estate requested for a waiver of damages, which request came to be rejected on the predication that the said establishment was neither a sick unit nor the subject of any scheme for rehabilitation sanctioned by the Board for Industrial and Financial Reconstruction. In the duration of those proceedings, the management of M/s. Mathura Tea Estate under the erstwhile ownership of Saroda Tea Company Ltd. was taken over by Eveready Industries (India) Ltd, which thereafter discharged the liability of entire principal sum of Provident Fund dues to the tune of Rs.75,76,000/- pertaining to the period prior to the takeover in consonance with the Memorandum of Understanding entered into between it and Saroda Tea Company Ltd. Significantly, the said Memorandum of Understanding also included a clause to the effect that any damages payable for the failure to deposit the dues and accumulations under the EPF Act would be the exclusive liability of Saroda Tea Company Ltd making it palpably evident that the appellant was fully alive to this liability.
It is in these premises that Eveready Industries (India) Ltd. undauntedly contended before the RPF Commissioner, Jalpaiguri, in the event in futility, that proceedings under Section 14B of the EPF Act against it were unjustified as it was not the "employer" defined under Section 2(e) of the EPF Act, which defaulted in paying contributions. The RPF Commissioner has recorded that M/s. Mathura Tea Estate had defaulted in payment of dues for the period from March, 1989 to February, 1998, which assertion of fact is not in dispute. It held that on a conjoint reading of Sections 14B and 17B of the EPF Act it was clear that damages under Section 14B were recoverable jointly and severally from Saroda Tea Company Ltd. as well as Eveready Industries (India) Ltd. After tabulating the rates of damages, i.e. percentage of arrears per annum depending on the period of default, damages were assessed at Rs.70,37,95
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