IMPORTANT POINT
The discretion of the Provident Fund Commissioner in imposing damages under Section 14B must consider the bona fides of the employer's reasons for delay, and damages can be set at a rate lower than the maximum of 25% based on the circumstances.

JUDGMENT :

P.G. AJITHKUMAR, J.

1. The judgment dated 31.01.2023 dismissing W.P.(C) No. 2084 of 2012 is under challenge in this appeal filed under Section 5(i) of the Kerala High Court Act, 1958. The Kerala State Civil Supplies Corporation Ltd, and its Regional Manager, Thiruvananthapuram are the appellants.

2. The respondent issued a notice dated 24.09.2004 to the appellants by exercising the powers conferred under Sections 7Q and 14B of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (the Act) owing to the belated payment of provident fund contribution, employees’ family pension fund contribution, deposit linked insurance fund contribution, administrative charges and inspection charges for the period from March, 1997 to February, 2003. The interest component was Rs.1,21,366/-and damages was Rs.3,50,736/-totalling Rs.4,72,102/-. After considering the objection raised about the computation, the amount was refixed as per Ext. P3 order dated 16.12.2004 as Rs.2,58,159/-i.e., 68,536 under Section 7Q and Rs.1,89,623/-under Section 14B of the Act. Against that order an appeal was preferred before the Provident Fund Appellate Tribunal, New Delhi. However, the respondent initiated action under Section 8F(3) of the Act for recovery of the amount.

3. The petitioner therefore approached this Court by filing W.P.(C) No. 871 of 2005. This Court vide judgment dated 10.01.2005 directed the appellants to deposit the interest portion within a week and directed the Appellate Tribunal to dispose of the appeal within three months. In compliance with the direction, interest portion was deposited. The appellate Tribunal vide order dated 31.12.2005 dismissed the appeal which was assailed in this Court by filing W.P.(C) No. 19336/05. This Court vide Ext.P4 judgment dated 16.02.2011 set aside the order and remanded the case back to the Commissioner. As directed in Ext.P4 judgment of this Court, the respondent held a personal hearing and passed order dated 02.06.2011, which is Ext.P5. Challenging that order the appellants filed the present writ petition. It was contended that the Ext.P5 was not sustainable in law on the ground that the respondent failed to understand the words 'may recover' occurring in Section 14B of the Act and omitted to exercise its discretion. The materials on record substantiated that there was no malafide action or inaction on the part of the appellants in not depositing the contribution in time and therefore the damages as prescribed under Section 14B of the Act in total should not have been imposed. It was contended that the respondent did not consider such aspects while issuing Ext.P5 order.

4. The learned Single Judge relying on the principle of law laid down by the Apex Court in Horticulture Experiment Station Gonikoppal, Coorg v. Regional Provident Fund Organization, (2022) 4 SCC 516 held that there was no merit in the writ petition. The resultant dismissal of the writ petition is under challenge in this appeal.

5. Heard the learned Standing Counsel for the appellants and the learned Standing Counsel for the respondent.

6. The interest that was found due on account of the delayed remittance of the provident fund contribution and other remittances, under Section 7Q of the Act was already paid. Of course, that was in terms of the direction of this Court as per the judgment in W.P.(C) No. 871 of 2005. The challenge now is confined to the damages imposed under Section 14B of the Act in terms of Ext.P5.

7. The essential contention is that this Court in terms of Ext.P4 judgment directed the respondent to consider objectively the objections the appellants have raised, but Ext.P5 sans any such consideration. The learned Standing Counsel for the appellants would submit that the law laid down in the Horticulture Experiment Station (2022) 4 SCC 516 was not applied appropriately and that resulted in the dismissal of the writ petition. The learned Standing Counsel places reliance on the decision of the High Court of Karnat