Back
DELHI HIGH COURT
Ved Prakash Vaish, J.
Apex Security & Detective Force Pvt. Ltd. - Appellant
Versus
Central Board of Trustees, EPF Organisation - Resopndent
W.P.(C) 2022/2011
Decided On : 08-05-2015
EPF - Quashing of order under EPF Act - Section 7-D, 7-I, 14B, 7Q - Summary of Acts and Sections: The court discussed the provisions of the Employees Provident Funds and Miscellaneous Provisions Act, 1952, particularly Sections 7-D, 7-I, 14B, and 7Q. It highlighted the purpose of the EPF Act, the power to recover damages for delayed Provident Fund deposits under Section 14B, and the liability of the management to pay interest in case of default under Section 7Q. The court emphasized the penal nature of damages under Section 14B and the objective to prevent employers from making defaults. It also addressed the absence of a time limit for initiating proceedings under Section 14B and the independent nature of the liability to pay interest under Section 7Q.
Fact of the Case:
The petitioner sought quashing of an order passed by the Employees Provident Fund Appellate Tribunal (EPFAT) and impugned an order levying damages and interest under the Employees Provident Funds and Miscellaneous Provisions Act, 1952. The petitioner contended that the impugned order was passed without proper application of mind and challenged the authority's power to levy damages and interest. The respondent argued that the EPF Act is a social welfare legislation and strict adherence to its provisions is mandatory.
Finding of the Court:
The court dismissed the petition, emphasizing the penal nature of damages under Section 14B of the EPF Act and the absence of a time limit for initiating proceedings. It held that the liability to pay interest under Section 7Q is independent and not ingrained under the damages computed under Section 14B. The court also rejected the petitioner's contention that damages could not be levied in the absence of arrears of provident fund contributions on the date of the notice.
Issues: The issues involved the authority's power to levy damages and interest under the EPF Act, the absence of a time limit for initiating proceedings under Section 14B, and the independent nature of the liability to pay interest under Section 7Q.
Ratio Decidendi: The court emphasized the penal nature of damages under Section 14B, the absence of a time limit for initiating proceedings, and the independent nature of the liability to pay interest under Section 7Q. It highlighted the objective to prevent employers from making defaults and the authority's power to impose exemplary or punitive damages.
Final Decision: The petition was dismissed, and the court upheld the authority's power to levy damages and interest under the EPF Act, emphasizing the penal nature of damages under Section 14B and the independent nature of the liability to pay interest under Section 7Q.
Ved Prakash Vaish, J.:--
1. By the present petition under Articles 226 and 227 of the Constitution of India, the petitioner seeks quashing of the order dated 02.02.2011 passed by the Presiding Officer, Employees Provident Fund Appellate Tribunal (hereinafter referred to as ‘the EPFAT’), New Delhi in Appeal No. 650(4)2004 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 30.04.2004 passed by the respondent whereby damages to the tune of Rs. 21,01,669/- (Rs. Twenty one lacs one thousand six hundred and sixty nine) under Sections 14B and 7Q of the EPF Act was cumulatively levied on the petitioner.
2. Brief facts as emerging from the petition are that the petitioner establishment was served with a letter No. DL/CPM/Circle:30/Damages/DL/12870/CA dated 15.01.2004 by the office of the respondent requiring the petitioner to make payment of interest and damages for the belated remittance under Section 7Q and 14B of the EPF Act for the period March 1997 to February 2002. The total amount due and payable was shown as Rs. 6,87,065/-(Rs. Six lacs eighty seven thousand and sixty five) as interest under Section 7Q and Rs. 16,80,570/-(Rs. Sixteen lacs eighty thousand five hundred and seventy) under Section 14B of the EPF Act. The action for levy of damages under Section 14B of the EPF Act was initiated on 03.02.2004 and the inquiry was fixed for 19.02.2004. The petitioner was forced to pay an amount of Rs. 2 lacs (Rs. Two lacs) on 08.03.2004 as payment towards proposed action for levy of damages and another Rs. 50,000/- (Rs. Fifty thousand) on 15.04.2004. The case was thereafter adjourned to 30.04.2004.
3. Thereafter, the petitioner received order dated 30.04.2004 with the forwarding letter dated 14.05.2004 whereby the respondent levied the damages and interest cumulatively as Rs. 21,01,669/- (Rs. Twenty one lacs one thousand six hundred and sixty nine). A review petition dated 26.05.2004 was filed by the petitioner before the respondent. However, the same was dismissed by the respondent and the same was informed to the petitioner vide letter dated 30.07.2004.
4. Against the order of levy of damages and interest, the petitioner preferred a statutory appeal ATA No. 650(04)2004. The petitioner was heard on the said appeal. However, the same was dismissed vide impugned order dated 02.02.2011.
5. Learned counsel for the petitioner contended that the impugned order was passed in a highly laconic manner without any application of mind. The impugned order dated 30.04.2004 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. v. Employees Provident Fund Appellate Tribunal & Ors.’, (2008) 2 LLJ 939 Del. and ‘Roma Henny Security Services Pvt. Ltd. v. Central Board of Trustees, E.P.F. Organization Through Assistant P.F. Commissioner, Delhi (North)’, (2013) I LLJ 29 Del. in support of this contention.
6. 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.
7. It was also contended on behalf of the petitioner that the EPFAT failed to appreciate that
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
