IMPORTANT POINT
Section 14B of the Act requires the employer to be given a reasonable opportunity of being heard before levying and recovering damages for default in the payment of contribution to the Fund.

JUDGMENT :

The petitioner Co-operative hospital is an establishment covered under the provisions of the Employees Provident Fund And Miscellaneous Provisions Act, 1952 (hereinafter referred to as “the Act”). The petitioner was issued with Ext. P1 communication by the 2nd respondent, the Assistant Provident Fund Commissioner asking to appear for hearing on 29.10.2015 and to show cause as to why penal damages as stipulated under Section 14B of the Act shall not be levied for the belated remittance of Provident Fund dues. The petitioner, vide Ext. P2 letter, requested the 2nd respondent to postpone the hearing slated on 29.10.2015 on account of Municipal election. Ext.P2 was sent by registered post on 24.10.2015 by courier service and Ext. P3 is the receipt and Ext. P4 is the delivery report issued by the courier service. Despite Ext. P2 request of the petitioner for postponement of the hearing, the 2nd respondent proceeded with the matter and passed Ext. P5 order levying damages under Section 14 B of the Act. In Ext. P5 proceedings, it is stated that although the petitioner was asked to appear on 29.10.2015 to provide an opportunity for a hearing, neither representation nor a reply from the petitioner was brought to the notice of the 2nd respondent nor did anybody appear for a personal hearing and therefore, it is deemed that the petitioner has no explanation to offer regarding the proposed levy, and left with no other option, ex parte proceedings for the determination of damages are issued. Aggrieved by Ext. P5 proceedings, this writ petition is filed.

2. A statement has been filed on behalf of the respondents wherein it is stated that the petitioner did not appear for the enquiry which was slated on 29.10.2025 and accordingly, it was decided to conclude the enquiry on 29.10.2015 on the basis of available documents. Paragraph 6 of the statement reads as follows:-

“It is submitted that the employer did not appear for the enquiry on 29.10.2015. It is stated in the assessment order itself that no request or representation for adjournment was brought to the notice of the enquiry authority in reply to Ext.P-1 summons.”

3. Heard Sri. Alias M.Cherian, the learned counsel for the petitioner and Sri. S. Prasanth, the learned standing counsel for the respondents.

4. Section 14 B of the Act reads as follows;

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-section (2) of section 15 or sub-section (5) of of section 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 section 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 section 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 section 4 of the Sick Industrial Companies (Special Provisions) Act, 1985, subject to such terms and conditions as may be specified in the Scheme.

(underlining supplied)

Section 14-B involves imposition of penalty, which entails serious civil consequences. The 1st proviso to Section 14B provides that, before levying and recovering damages for the default in the payment of contribution to the Fund, the employer shall be given a reasonable opportunity of