Damages for delayed payment under the EPF Act cannot exceed the amount of arrears, and interest cannot be levied on penal amounts without statutory authority.

JUDGMENT

G.NARENDAR, J. - Heard the learned counsel for the petitioner.

2. Petitioner is before this Court being aggrieved by the order dtd. 14/9/2020 rendered in EPF No.34/2018. Primarily, the writ petition is vitiated by delay and laches. The order impugned is dtd. 14/9/2020 and the writ petition impugning the same is filed into this Court on 25/5/2023 i.e. after a passage of nearly three years. Be that as it may, we have also examined the impugned order on merits. It is the contention of the petitioner that the damages have been calculated in terms of Para 32A of The Employees' Provident Funds Scheme, 1952 (for short 'EPF Scheme, 1952'), which reads as under:-

"[32A. Recovery of damages for default in payment of any contribution:- [(1) Where a employer makes default in the payment of any contribution to the Fund, or in the transfer of accumulations required to be transferred by him under sub-sec. (2) of Sec. 15 or sub-sec. (5) of Sec. 17 of the Act or in the payment of any charges payable under any other provisions of the Act or the Scheme or under any of the conditions specified under Sec. 17 of the Act, the Central Provident Fund Commissioner or such officer as may be authorised by the Central Government by notification in the Official Gazette in this behalf, may recover from the employer by way of penalty, damages at the rates given in the table below:-

(2) The damages shall be calculated to the nearest rupees, fifty paise or more to be counted as the nearest higher rupee and fraction of a rupee less than fifty paise to be ignored."

3. It is imperative to reproduce Sec. 14B of The Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (for short 'the Act') and the same reads as under:-

"[14B. Power to recover damages.-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 accumulations required to be transferred by him under sub-sec. (2) of Sec. 15 [or sub-sec. (5) of Sec. 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 Sec. 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] may recover [from the employer by way of penalty such damages, not exceeding the amount of arrears, as may be specified in the Scheme:]

[Provided that before levying and recovering such damages, the employer shall be given a reasonable opportunity of being heard]:

[Provided further that the Central Board may reduce or waive the damages levied under this Sec. in relation to an establishment which is a sick industrial company and in respect of which a scheme for rehabilitation has been sanctioned by the Board for Industrial and Financial Reconstruction established under Sec. 4 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) subject to such terms and conditions as may be specified in the Scheme.]

(i) Levy of damages and interest for default in E.P.F. dues not justified when the employer suffered continuous losses; Regional Provident Fund Commissioner - II and Recovery Officer v. Elysium Pharmaceuticals Limited, 2013 LLR 199 (Guj HC).

(ii) For levying damages under Sec. 14-B of the E.P.F. and M.P. Act, there must be a mens rea; solidaire India Limited v. The Employees Provident Fund Appellate Tribunal 2012 LlR 704 (Mad HC).

(iii) Levy of damages for delayed deposit of Provident Fund contributions, without ascertaining its frequency, not proper, Damien Foundation India Trust, rep. by Mr. L. Camillus Rajkumar, Chennai v. Presiding Officer, Employees' Provident Fund Appellant Tribunal, Coimbatore, 2011 LLR 1156 (Mad HC).

(iv) The delay in making payments should not prejudice the employees for whose benefit the fund is created. Where "default" is found, but no apparent "fault", the quantum of damages