Interest under Section 7Q of the EPF and MP Act is separate from damages and is a regulatory measure to protect the interest of employees.

JUDGMENT

(Prayer:- Writ Petition filed under Article 226 of Constitution of India for the issuance of Writ of Certiorari, calling for the records of the respondent in proceedings No.PDC/PC/364/REGL/2014(Interest) and quash its order dated 06.08.2014.)

1. This Writ Petition has been filed challenging the order passed by the respondent in proceedings No.PDC/PC/364/REGl/2014(Interest) dated 06.08.2014, thereby directed the petitioner to pay interest under Section 7Q of the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952 (herein after called as EPF and MP Act) to the tune of Rs.7,06,146/-.

2. The petitioner is engaged in the manufacture of shoe uppers. Due to adverse business reasons, the net worth of the petitioner got eroded and it became a sick company. There was a delay in payment of wages to the employees, which resulted in delay in payment of contribution under the EPF and MP Act. While being so, the petitioner was directed to pay contribution after the month of March 2010, by its notice dated 19.03.2014. After litigation, the respondent claimed damages at Rs.8,13,253/- and interest at Rs.7,06,146/- totalling to Rs.15,19,399/-. The respondent claimed damages including interest from the employers ranging from 17% to 37% per annum. With effect from 26.09.2008, Section 7Q of the EPF and MP Act was introduced by which the interest was levied at 12% per annum towards belated payment of contribution. Therefore, from 26.09.2008, the damage was proportionately reduced by 12% namely ranging from 5% to 25% per annum. A notice dated 06.08.2014, was served with the petitioner claiming interest for belated payment from August 2000 to January 2014 at Rs.7,06,146/- under Section 7Q of EPF and MP Act.

3. Mr.S.Ravindran, the learned Senior Counsel appearing for the petitioner submitted that prior to the introduction of separate provision of levy of interest on the delayed payment of PF contribution, Section 14B of the EPF and MP Act provided for levy of damages including interest. This was implemented in terms of Para 32A of EPF Scheme by providing a table levying damages at the rate of 17%, 22%, 27% and 37% per annum depending upon the period of default in payment of contribution. The provisions under Section 7Q of EPF and MP Act was introduced in the year 1988 providing for interest at the rate of 12% per annum. However, this provision was made effective only from 01.07.1997. Therefore, the percentage of damages should be proportionately reduced at 5%, 10%, 15% and 25%. However, the respondent claimed damages at the rate of 17%, 22%, 27% and 37%, thereby claiming interest twice, under Section 14B and another under Section 7Q of EPF and MP Act.

4. He further submitted that Para 32A of EPF Scheme was corrected and levy of damages was fixed at 5%, 10%, 15% and 25% effectively from 01.10.2008. However, the respondent imposed damages as per the old table as 17%, 22%, 27% and 37% per annum and also now claiming interest at 12% per annum for the period from August 2000 to January 2014. Therefore, the period from August 2000 to September 2008, the petitioner is not liable to pay any interest. If at all any interest payable by the petitioner, it is only for the period from October 2008 to January 2014.

5. He further submitted that similar issue was dealt by the Hon''ble Full bench of Delhi High Court reported in 2012 (132) DRJ 753 (FB) in the case of Roma Henny Security Services Pvt.Ltd Vs Central Board of Trustees, EPF Organization, wherein it was held that the damages under Section 14B of the EPF and MP Act were inclusive of interest chargeable under Section 7Q of EPF and MP Act. Therefore, the respondent had no right to charge the interest under Section 7Q of EPF and MP Act additionally, when it already stood payable in the order passed under Section 14B of EPF and MP Act. It was challenged by the Central Board of Trustees before the Hon''ble Supreme Court of India in Civil Appeal No.6592 of 2014 in the case of Central Board of Trus