The distinction between damages and interest under the EPF and MP Act, and the statutory provisions governing the levy of interest under Section 7Q.

JUDGMENT

(Prayer:- Writ Petition filed under Article 226 of Constitution of India for issuance of Writ of Certiorari, calling for the records of the Respondent dated 18.11.2014 in Proceeding No.TB/RO/TAM/PDC/ 62908/51/7Q/2014 and quash its order dated 18.11.2014.)

1.This Writ Petition has been filed challenging the order passed by the respondent in Proceeding No.TB/RO/TAM/PDC/62908/51/7Q/2014 dated 18.11.2014, thereby directed the petitioner to pay interest under Section 7Q of the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952 to the tune of Rs.21,38,272/-.

2. The petitioner College was informed about the applicability of the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952 (herein after called as ''EPF and MP Act''). The petitioner College paid Rs.12,57,482/- as contribution for the period from June 2005 to July 2012. However, the respondent initiated proceedings under Section 7A of the Act claiming further payment of contribution in respect of teaching and non-teaching staff. By an order dated 18.12.2012, the respondent held that for the period June 2005 to July 2012, the petitioner College was liable to pay further contribution of Rs.42,68,560/- and the petitioner College also paid the same. Thereafter, to the shock of the petitioner College, the petitioner was directed to pay additional contribution for a period from June 2005 to July 2012, by its notice dated 01.07.2014. After litigation, the respondent claimed interest at Rs.21,38,272/-. The respondent claimed damages including interest from the employers ranging from 17% to 37% per annum. With effect from 01.07.1997, Section 7Q of the EPF and MP Act was introduced by which 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 01.07.2014, was served on the petitioner claiming interest for belated payment from June 2005 to July 2012 at Rs.21,38,272/-.

3. Mr.S.Bazeer Ahamed, the learned Counsel appearing for the petitioner submitted that prior to the introduction, 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 June 2005 to July 2012. Therefore, the period from 01.06.2005 to 25.09.2008, 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 26.09.2008 to 31.07.2012.

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