IMPORTANT POINT
Ex-parte orders under the EPF Act must adhere to principles of natural justice, ensuring parties are given notice and an opportunity to be heard.

ORDER :

1. Heard Mr. Vedula Srinivas, learned counsel appearing on behalf of the Petitioners and Mr. S.Prabhakar Reddy learned counsel appearing on behalf of the Respondents.

2. The petitioners approached this Court seeking prayer as under:

“To issue a Writ of Mandamus or any other appropriate writ order or orders, direction or directions to declare the proceedings of the 1st respondent dated 05.08.2011 in No. AP/22487/P.D-Cell.I/RO/Hyd/T.5/ 2011/671 and also the consequential proceedings of the 2nd respondent dated 13.09.2012 in reference No. AP/22487/Recovery Cell/PDRC 155/12, as illegal, arbitrary and violative of principles of natural justice and to set aside the same and to issue a consequential direction to the respondents to act in accordance with law.”

3. PERUSED THE RECORD:

The interim orders of this Court dated 28.09.2012 passed in W.P. No. 30372 of 2012 reads as under:

“It is contended by the learned counsel for the petitioners that show cause notice bearing Ref. No. A.P./22487/Recovery Cell/PDRC 155/12, dated 13.09.2012 is not served on the petitioners and that the 1st petitioner is not functioning from 2003 onwards.

In that view of the matter, notice before admission.

Pending further orders, there shall be interim stay as prayed for.”

4. The case of the Petitioner, in brief, as per the averments made by the petitioner in the affidavit filed by the petitioner in support of the present writ petition is as follows:

The 1st Petitioner is a company registered under Companies Act, and it is carrying on the manufacture of Packaging Material at its factory situated at IDA, Uppal. The 1st Petitioner ran into severe losses and ultimately stopped its production activity in the year 2003, due to the accumulated losses and bad financial position it could not pay the Provident Fund contributions under the EPF Act, 1952 within the prescribed time. All the workmen had left the employment and there is no activity at all since June 2003. The Provident contributions were paid upto the month of June 2003 belatedly and there is no need to pay any further contributions as industry itself stopped its activities and the workmen have left the employment.

It is further the case of the Petitioners that the 2nd Petitioner was served with Notice by the 2nd Respondent on 24.09.2012 dated 13.09.2012 asking the 2nd Petitioner to show cause as to why warrant of arrest should not be issued against the 2nd Petitioner on account of the 1st Petitioner not paying the arrears under the EPF Act. The said Notice was issued U/s.8G of the EPF Act. The 2nd Petitioner was also asked to appear before the 2nd Respondent on 25.09.2012 to show cause why the 2nd Petitioner should not be committed to civil prison. Upon inquiry it came to light that the 1st Respondent passed an order dated 05.08.2011 imposing damages U/s.14B of the EPF Act on the ground of delay in payment of contributions by the 1st Petitioner company in respect of the contributions paid during the periods 1995 to 2003 and in the furtherance of the said order of the imposition of damages the 2nd Respondent had invoked the provisions of Section 8G of the EPF Act for the recovery of the alleged damages amount by way of 2nd Petitioner’s arrest and detention in civil prison. Aggrieved by the same Petitioner filed the present writ petition.

5. The Learned Senior Counsel appearing on behalf of the Petitioner mainly put-forth the following submissions:

(i) The proceedings of the 1st Respondent dated 05.08.2011 are ex-parte in nature and hence unsustainable.

(ii) The 1st Respondent had initiated the proceedings after more than 7 years from the date of delay in the payment of last period of contributions and such a delay in initiating the proceedings itself is illegal.

(iii) The order impugned dated 05.08.2011 is in clear violation of principles of natural justice.

(iv) Unless the 1st Respondent records that there was mens rea on the part of the 1st Petitioner there cannot be imposition of damages automatically on mere de