Mens rea is not a prerequisite for imposing damages under Section 14B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.

ORDER :

Mummineni Sudheer Kumar, J.

This writ petition has been filed by the Employees Provident Fund Organisation aggrieved by an order dated 19.08.2014, passed by the Employees' Provident Fund Appellate Tribunal, New Delhi, in A.T.A.No. 695(13)2014, whereby the learned Appellate Tribunal allowed the appeal filed by the respondent against the order dated 23.05.2014, passed under Section 14B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 , (in short, “the Act, 1952”) levying damages of Rs.37,73,565/-.

2. The perusal of the impugned order dated 19.08.2014 would disclose that the learned Appellate Tribunal interfered with the order passed by the Primary Authority under Section 14B of the Act, 1952, on the ground that there is no mens rea on the part of the respondent herein in non-remittance of the provident fund contributions in time.

3. The existence of mens rea is not a condition precedent for imposing damages under Section 14B of the Act, 1952 and the same is now well settled legal position in the light of the law laid down by the Honourable Apex Court in the case of Horticulture Experiment Station vs. Provident Fund Organisation , reported in (2022) 4 SCC 516

4. In the light of the above decision of the Apex Court, all previous decisions on the said issue stood overruled, wherein it is held that existence of mens rea is a condition precedent for imposing damages.

5. The impugned order herein is also an order passed by the Appellate Tribunal allowing the appeal filed by the respondent herein only on the ground that there is no mens rea on the part of the respondent herein in non remittance of the provident fund contributions and thereby allowed the appeal. Hence, in the light of the law laid down by the Apex Court in the case of Horticulture Experiment Station (cited supra), the impugned order cannot be sustained.

6. A Full Bench of this Court also having taken note of the above said decision of the Honourable Apex Court, by a common Judgment dated 03.06.2024, passed in W.P.(MD) Nos.7339, 9688 of 2013, 2765 & 2782 of 2014, laid down certain guidelines in the matter of deciding the liability under Section 14B of the Act, 1952. Paragraph No.39 of the said decision reads as under:

39.Therefore, following the principles reiterated by the Hon'ble Supreme Court and different High Courts including our High Court in similar circumstances, this Court hold that Section 14-B of the Act is an enabling provision and it does not envisage any compulsion to levy damages in all cases, and is inclined to frame the following guidelines:-

(i) Before levying damages in terms of Section 14-B of the Act, every authority is required to follow principles of natural justice. The particulars of the default, period, etc., and every adverse information that may be relied upon for levying damages should be indicated or furnished to the employer and a fair opportunity should be given to the employer to put forth his case in defence to the proposed action.

(ii) The authority, while exercising power under Section 14-B, shall keep in mind that the liability as per the table given in Para 32A of the Scheme, should be treated as upper limit within which damages can be levied for the delay in making contributions by the employer.

(iii) In appropriate cases where the employer is able to provide sufficient reasons or cause justifying the delay with verifiable materials, the authority is competent to waive or fix the quantum of damages less than what is shown in the table under Para 32A of the Scheme.

(iv) When an employer is not in a position to make payment in order to save the industry from closure or on account of protecting the industry or establishment from being put to face proceedings under the SARFAESI Act or other inevitable circumstances which compels the employer to divert the funds only to save the industry and the employees, there cannot be a levy of damages.

(v) The authority under the Act has to consider all the mitigating circumstanc