Mens rea is not required for imposing damages under Section 14B of the Employees’ Provident Funds and Miscellaneous Provisions Act, emphasizing strict civil liability for statutory obligations.

JUDGMENT :

A.D. MARIA CLETE, J.

1. Heard.

2. This writ appeal is directed against the order dated 14.11.2018 passed by the learned Single Judge in W.P.(MD) No. 2788 of 2015, by which the order of the Assistant Provident Fund Commissioner imposing damages under Section 14 B of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter “the EPF Act”) was set aside solely on the ground that the default in remitting provident fund contributions was not wilful and did not involve mens rea.

3. The respondent, an establishment governed by the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, defaulted in the timely remittance of provident fund contributions for the period from April 2010 to March 2013. Pursuant to the issuance of a show cause notice and completion of inquiry, the appellant authority passed an order dated 22.01.2015 imposing damages to the tune of Rs. 9,04,532/- under Section 14B of the EPF Act.

4. The respondent initially filed a statutory appeal before the EPF Appellate Tribunal, which was subsequently transferred to the Central Government Industrial Tribunal (CGIT), Chennai. However, owing to the non-functioning of the Tribunal due to vacancy, the respondent filed W.P.(MD) No. 2788 of 2015 before this Court.

5. During the pendency of the said appeal, the respondent filed W.P.(MD)No. 2788 of 2015, challenging the order passed under Section 14 B of the EPF Act. The learned Single Judge, by order dated 14.11.2018, allowed the writ petition and quashed the damages order on the ground that the default was not wilful and that the provident fund contributions had been remitted, albeit belatedly.

6. The appellant–EPF Authority filed the present writ appeal on 24.04.2019, assailing the reasoning and conclusion of the learned Single Judge.

7. It was brought to our notice that the statutory appeal pending before the CGIT was ultimately disposed of only on 27.02.2024, nearly six years after the writ petition had been allowed and while the present writ appeal was still pending.

8. In our considered view, the learned Single Judge erred in entertaining the writ petition on merits despite the pendency of a statutory appeal, and further, in setting aside the authority's order on the premise that the default was not wilful. This Court has consistently held that proceedings under Section 14B of the EPF Act impose civil liability for breach of a statutory obligation.

9. The question of whether mens rea is required to impose damages under the EPF Act is no longer res integra, as the issue has been conclusively settled by the Hon’ble Supreme Court in a catena of judgments. In Horticulture Experiment Station v. Regional Provident Fund Organization , (2022) 4 SCC 516 , it was held that mens rea or actus reus is not an essential requirement or sine qua non for levying penalty under Section 14B of the EPF Act.

10. The Supreme Court has unequivocally held that mens rea is not a necessary ingredient for imposing damages under Section 14 B of the EPF Act. The purpose of levying such damages is both compensatory and deterrent, intended to secure prompt remittance of statutory dues. An employer in default cannot invoke the absence of mens rea or rely on alleged bona fide reasons to avoid liability under Section 14 B, as the provision contemplates strict civil liability. The element of guilty intention becomes relevant only in the context of criminal