The main legal point established in the judgment is that the exercise of discretionary powers to reduce damages under the Proviso Clause of Section 14-B should be based on exceptional circumstances with sufficient reasoning recorded in writing, and in the absence of proof that the company was declared as sick, the reduction of damages would be in violation of Section 14-B itself.

ORDER :

1. The order passed by the first respondent in ATA No. 520(13) 2014 dated 19.08.2014, is sought to be quashed in the present writ petition.

2. The petitioner is the Regional Provident Fund Commissioner, Employees- Provident Fund Organization. The order of the Tribunal is sought to be quashed, mainly on the ground that the Tribunal granted waiver of the damages, which is impermissible and the Tribunal has no jurisdiction to grant such a waiver. The petitioner states that the second respondent-company is an Establishment and paying contribution under the Employees Provident Fund Act. There was a belated payment of contributions and the interest levied, which was paid by the second respondent-company. However, the damages imposed at 17% was questioned by the second respondent. The Tribunal erroneously considered the claim of the second respondent and granted reduction of the damages from 17% to 5%.

3. The learned counsel for the petitioner states that the Tribunal has no jurisdiction to reduce the damages already fixed by the authorities competent under the provisions of the Act. Such a reduction is impermissible in view of the fact that the second respondent had committed a default in making payment and therefore, the Tribunal ought not to have reduced the amount of damages from 17% to 5%.

4. The learned counsel appearing on behalf of the second respondent states that before the Tribunal, they have established that the Unit was sick and not in a position to pay the contribution itself. With great difficulty, they have paid the contribution along with interest and therefore, imposition of damages would cause greater financial burden for running the unit itself and they have approached the Tribunal to reduce the damages and the Tribunal considered the facts and circumstances prevailing in the second respondent Unit and reduced the damages from 17% to 5%. Thus, the reasons are recorded in writing by the Tribunal and as per the provisions of the Act, Tribunal is empowered to reduce the damages, if the facts and circumstances warrants, and established.

5. In the present case, the second respondent-Management could able to establish the sickness as well as the financial conditions of the second respondent and consequently, the Tribunal passed an order, reducing the damages from 17% to 5%. Thus, there is no infirmity in respect of the order of the Tribunal and the authorities have unnecessarily filed the present writ petition.

6. The learned counsel appearing for the writ petitioner cited the judgment of this Court passed in W.P. No. 17518 to 17521 of 2011 and etc., batch dated 21.06.2011, wherein the issues were elaborately adjudicated and following findings were given at Paragraph 27 and the same is as follows:

“27. If it is seen in this context, then the argument made by the learned Standing counsel for the PF Authorities that the Tribunal has no power to modify the order must necessarily fail. Therefore, it must be held that the Tribunal has the power to go into all aspects of an appeal including the power to modify the orders passed by the authorities in leving damages.”

7. Let us now consider the spirit of Section 14-B of the Employees Provident Fund and Miscellaneous Provisions Act 1952. Undoubtedly, Section 14-B of the Act provides Power to the authorities 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 him, then they are empowered to impose penalty. Such damages not exceeding the amount of arrears, as may be specified in the Scheme.

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 company and in respect of which a scheme for rehabilitation has been sanctioned by the Board for Industrial and Financial Reconstruction established under