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2015 Supreme(Del) 769
High Court of Delhi
VED PRAKASH VAISH, J.
Road Transport Corporation Through Sh. Vikas Goyal – Petitioner
Versus
Central Board of Trustees, EPF Organisation – Respondent
W.P.(C) No. 5068 of 2014
Decided On : 11-05-2015
For the Petitioner:S.P. Arora, Advocate.
For the Respondent:R.C. Chawla, D. Rajeshwar Rao, Advocates.
The main legal point established in the judgment is that damages under Section 14B of the EPF Act can be imposed for belated payments, not just arrears, and that the liability to pay interest under Section 7Q is independent of damages under Section 14B.
Headnote:
Employees Provident Fund - Quashing of EPFAT order - EPF Act, 1952, Section 7-D, Section 7-I, Section 14B, Section 7Q - The court discussed the provisions of the EPF Act, particularly Section 14B and Section 7Q, and their interpretations. It highlighted the purpose of Section 14B as a deterrent measure to prevent employers from defaulting in provident fund payments and the authority's power to impose exemplary or punitive damages. The court also emphasized that the circular prescribing a limitation period for raising demands under Section 14B does not override the statutory provisions. It clarified that damages under Section 14B can be imposed for belated payments, not just arrears, and that the liability to pay interest under Section 7Q is independent of damages under Section 14B.
Fact of the Case:
The petitioner sought quashing of EPFAT's order dismissing their appeal under Section 7-D and Section 7-I of the EPF Act and impugning the order levying damages and interest under Section 14B and Section 7Q of the EPF Act. The petitioner's establishment was closed, and the proceedings were carried out ex-parte against them. The petitioner contended that the impugned order was passed without application of mind and that they were not liable to pay interest under Section 7Q as no amount of damages was due from them. They also argued that the proceedings were initiated after a lapse of three years, beyond the limitation period prescribed by a departmental circular.
Finding of the Court:
The court found that the EPF Act is a beneficial piece of legislation meant to provide social and financial security to workers. It emphasized the purpose of Section 14B as a deterrent measure to prevent defaults in provident fund payments and clarified that damages under Section 14B can be imposed for belated payments, not just arrears. The court also held that the circular prescribing a limitation period for raising demands under Section 14B does not override the statutory provisions. It further clarified that the liability to pay interest under Section 7Q is independent of damages under Section 14B. The court dismissed the petition, stating that the petitioner failed to inform the respondent about the closure of its address and that the impugned orders were not flawed.
Issues: The issues involved the quashing of EPFAT's order, the imposition of damages and interest under the EPF Act, and the interpretation of Section 14B and Section 7Q.
Ratio Decidendi: The court's decision was based on the interpretation of the EPF Act, particularly Section 14B and Section 7Q, and the clarification that the circular prescribing a limitation period for raising demands under Section 14B does not override the statutory provisions. The court also emphasized the purpose of Section 14B as a deterrent measure to prevent defaults in provident fund payments and clarified that damages under Section 14B can be imposed for belated payments, not just arrears. It further clarified that the liability to pay interest under Section 7Q is independent of damages under Section 14B.
Final Decision: The petition was dismissed as without merit, and the application was dismissed as infructuous.
1. By the present petition under Articles 226 and 227 of the Constitution of India, the petitioner seeks quashing of the order dated 25.04.2014 passed by the Presiding Officer, Employees Provident Fund Appellate Tribunal (hereinafter referred to as ‘the EPFAT’), New Delhi in Appeal No. 201(03)2014 whereby the appeal of the petitioner under Section 7-D read with Section 7-I of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as the EPF Act) was dismissed by the EPAT. The petitioner also impugns the order dated 29.08.2013 passed by the respondent whereby damages to the tune of Rs. 5,87,953/- (Rupees Five lacs eighty seven thousand nine hundred and fifty three) under Section 14B of the EPF Act along with a sum of Rs.2,91,706/- (Rs. Two lacs ninety one thousand seven hundred and six) under Section 7Q of the EPF Act was levied on the petitioner.
2. Brief facts as emerging from the petition are that the petitioner is covered under the provisions of the EPF Act and the petitioner ever since had been depositing its Provident Fund contributions on time. The petitioner establishment is lying closed since long time and no business is being conducted from the official address available with the respondent. The respondent initiated the proceedings under the provisions of EPF Act against the petitioner and levied the damages on the petitioner establishment vide impugned order dated 28.08.2013. However, the entire proceedings were carried out ex-parte against the petitioner.
3. Against this order the petitioner preferred an appeal which was dismissed vide impugned order dated 25.04.2013. In these circumstances, the petitioner has approached this court by means of the present petition.
4. Learned counsel for the petitioner contended that the impugned order was passed without application of mind in a highly laconic manner as a matter of routine. The impugned order dated 29.08.2013 was passed ex-parte as against the petitioner. During the entire proceedings, the petitioner was never heard. The show cause notice dated 23.03.2012 issued by the respondent was never served on the petitioner and was returned with the remarks, ‘Left Without Address’. Further, the notice dated 29.06.2013 which was forwarded to the branch of the petitioner at Jamshedpur has no authenticity. Otherwise also, the said order is a non speaking order and non-elaborate as it does not disclose as to how the amount of damages as well as interest was arrived at and calculated. The damages under Section 14B of the EPF Act, inherently contains the amount of loss of interest to the department as well. Charging of interest in addition to damages for the same period is against the Constitutional provisions. Reliance in this regard is placed on ‘System and Stamping and Anr. vs. Employees Provident Fund Appellate Tribunal & Ors.’, (2008) 2 LLJ 939Del. and ‘Roma Henny Security Services Pvt. Ltd. vs. Central Board of Trustees, E.P.F. Organization Through Assistant P.F. Commissioner, Delhi (North)’, (2013) I LLJ 29 Del.
5. It was further contended by learned counsel for the petitioner that the petitioner is not liable to pay interest charged under Section 7Q of the EPF Act as no amount of damages was due from the petitioner. Otherwise also, the respondent does not have power to charge interest under the said section. Provisions of Section 7Q are prescribing in nature and not charging. There are no provisions for recovery of the amount of interest if levied or charged under this Section.
6. It was also contended on behalf of the petitioner that the EPFAT failed to appreciate that the proceedings against the petitioner establishment were initiated after a lapse of three years which is clearly beyond the limitation period and is barred by departmental circular dated 28.11.1990. As per the said circular, Regional Provident Fund Commissioners were directed to ensure that all pending cases were disposed off within a period of 3 years from the
