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IN THE HIGH COURT OF JUDICATURE AT MADRAS
S.M. SUBRAMANIAM, J.
The Assistant Provident Fund Commissioner, Coimbatore – Appellant
Versus
The Presiding Officer Employees Provident Fund Appellate Tribunal, New Delhi & Another - Respondents
W.P. No. 14328 of 2014 & M.P. No. 2 of 2014
Decided on : 15-07-2022
EPF Act - Recovery of Damages - Section 14-B - Summary of Acts and Sections: EPF Act, 1952 - Section 7A, 7Q, 14B - The court discussed the power of authorities to recover damages under Section 14-B and the discretionary power to reduce or waive damages in exceptional circumstances under the Proviso Clause. The court emphasized the need for sufficient reasoning and evidence to exercise discretionary power and held that reduction of damages without adequate proof of the establishment being declared as sick was in violation of Section 14-B.
Fact of the Case:
The Regional Provident Fund Commissioner filed a writ petition questioning the validity of an order passed by the 1st respondent regarding the recovery of Provident Fund contributions and statutory charges from a defaulted establishment. The 2nd respondent, a purchaser of the defaulted establishment's properties, appealed to the Employees Provident Fund Appellate Tribunal, which set aside the original order. The present writ petition was filed challenging the tribunal's order.
Finding of the Court:
The court found that the tribunal's reduction of damages without sufficient evidence of the establishment being declared as sick was in violation of Section 14-B of the EPF Act. The court quashed the impugned order and directed the 2nd respondent to pay the damages within a specified period.
Issues: The issues revolved around the validity of the order for recovery of Provident Fund dues and the tribunal's discretionary power to reduce damages under Section 14-B of the EPF Act.
Ratio Decidendi: The court held that the exercise of discretionary power to reduce damages must be based on exceptional circumstances and supported by sufficient reasoning and evidence. Reduction of damages without proof of the establishment being declared as sick was in violation of Section 14-B.
Final Decision: The court quashed the impugned order and directed the 2nd respondent to pay the damages within a specified period.
JUDGMENT :
(Prayer: Writ Petition filed under Article 226 of the Constitution of India for issuance of a Writ of Certiorari, to call for the records relating to the proceedings of the 1st respondent dated 05/02/2014 and in ATA No.91 (13) 2014 and quash the order.)
1. The writ petition has been filed questioning the validity of the order passed by the 1st respondent in proceedings dated 05.02.2014.
2. The petitioner is the Regional Provident Fund Commissioner and the M/s. Chaya Knittings, defaulted in the payment of Provident Fund contributions and other statutory charges for the period from 06/2000 to 09/2005 to a tune of Rs.1,69,047/- and for a period of 10/2005 to 03/2006 Rs.1,01,102/- were assessed under Section 7A of the EPF Act. The interest and damages levied under Section 7Q & 14B of the Act for the period 2/2000 to 5/2003 for Rs.2,02,380/- and Rs.6,16,939/- respectively, and interest and damages for the period from 05/2003 to 07/2004 for Rs.25,555/- & Rs.71,187/- respectively. The establishment had to remit the EPFO total dues of Rs.12,94,331/- (cost and charges). The employer was issued with a show cause notices informing the proposed levy of damages for the default committed by the M/s.Chaya Knitting Ltd, Establishment duly annexing the statement showing the wage month, due date and amount payable in the respective Accounts.
3. It is stated that the Tamil Nadu Industrial Investment Corporation Limited (TIIC), Tirupur Branch has taken possession of the machinery hypothecated to them and the immovable properties of the establishment during November 2007 against their mortgage. The land and building under their possession were sold in public auction by the TIIC authorities on 23.12.2010 to Shri Suresh Babu, Proprietor, M/s.AB. Screens, who is arrayed as the 2nd respondent in the present writ petition. The M/s.AB.Screens is the purchaser of the properties of M/s.Chaya Knitting Ltd through M/s. Tamil Nadu Industrial Investment Corporation Limited. Therefore, the Recovery Officer has issued the order dated 23.01.2014 directing the purchaser of the defaulted establishment M/s. Chaya Knitting Ltd to remit the dues payable by the defaulted establishment.
4. The 2nd respondent preferred an appeal to the Employees Provident Fund Appellate Tribunal and the tribunal passed a final order setting aside the order issued by the original authority. Challenging the said order, the present writ petition has been filed.
5. The issues raised by the writ petitioner with reference to the impugned order is no more res integra and this Court has considered the similar issue in W.P.No.6643 of 2014 and passed an order on 18.10.2019 and the said writ petition was also filed by the Regional Provident Fund Commissioner, Coimbatore, who is the petitioner in the present writ petition.
6. The said order passed by this Court in W.P.No.6643 of 2014 was taken by way of an appeal before the Hon'ble Division Bench in W.A.No.101 of 2020 and the Division Bench also confirmed the order on 12.02.2020. The said order was challenged before the Hon'ble Supreme Court of India and the said Special Leave to Appeal was also disposed of by the Hon'ble three Judges Bench of the Supreme Court of India.
7. This Court has passed an order in W.P.No.6643 of 2014, as under
8. However, Proviso Clause to Section 14-B of the Act enumerates that the Central Board may reduce or waive the damages levied under this section in relation to an establishment, which is a sick industrial c
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