The court established that while imposing damages under the Act, the circumstances around the delay should be considered, rather than imposing 100% damages mandatorily.

JUDGMENT

The petitioner is stated to be a charitable society providing employment to the economically backward and destitute and thereby helping their existence and survival. The petitioner is admittedly covered under the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter referred to as the ‘Act’). Admittedly, there was a delay in remitting contribution payable to the EPF Organization for the period from January 2016 to March, 2021. On that basis, proceedings were taken proposing to levy damages under Section 14B of the Act. The petitioner states that in response to the show cause notice, he entered appearance and explained the reasons for the delay in remitting the contribution. Inspite of that, the respondent has issued Ext.P2 order dated 28.02.2022, levying damages to the extent of Rs.5,16,630/-. The petitioner is before this Court seeking to challenge the afore order.

2. I have heard Sri. P.R.Ajith Kumar, the learned counsel for the petitioner, as well as Smt.Sindhu Ravishankar, the learned Standing Counsel for the respondent.

3. The learned counsel for the petitioner contends that the order at Ext.P2 has been issued without noticing the contentions/explanations offered for the delay and proceeding as if damages mandatorily required to be imposed under the provisions of Section 14B of the Act. According to him, section 14B, since it uses the term “may”, the respondent had a duty to consider the question as to whether the mandatory imposition of 100%

damages was required or not.

4. Per contra, the learned Standing Counsel for the respondent would seek to rely on the judgment of the Apex Court in Horticulture Experiment Station Gonikoppal, Coorg v. Regional Provident Fund Organization [ (2022) 4 SCC 516 ] to contend that there was no requirement to have considered as to whether the petitioner had any mens rea and therefore the demand for damages was perfectly justified.

5. I have considered the rival submissions as well as the connected records.

6. A learned Single Judge of this Court in Central Board of Trustees v. Bake ‘N’ Joy Hot Bakery [ 2024(2) KHC 87 ] has considered an almost identical issue with reference to the damages under Section 14B of the Act, where the Tribunal reduced the damages from 100% to 50% and considered the contention raised by the organization to the effect that the mandatory imposition of 100% penalty was required. The findings of this Court are as under:-

“4. Having heard the learned counsel appearing for the petitioner and the learned counsel appearing for the 1^st respondent, I am of the view that there is considerable merit in the contention taken by the learned counsel appearing for the 1^st respondent. The facts which compelled the Tribunal to take a view that this was not a case where the damages had to be levied at 100% is spelt out in the order itself. These reasons have already been noticed by this Court while considering the submissions of the learned counsel appearing for the 1^st respondent. Indeed, the requirement of mens rea and/or actus reus is no longer a necessary ingredient to be proved to impose damages. In Horticulture Experiment Station v. Provident Fund Organization, 2022 (4) SCC 516, after referring HMT (supra), McLeord Russel (India) Ltd. (supra), Provident Fund Commr. v. RSL Textiles (India) (P) Ltd 2017 (3) SCC 110. SEBI v. Shriram Mutual Fund, 2006 (5) SCC 361 & Union of India v. Dharamendra Textile Processors, 2008 (13) SCC 369 it was held: -

"15. Taking note of the exposition of law on the subject, it is well -settled that mens rea or actus reus is not an essential element for imposing penalty or damages for breach of civil obligations and liabilities."

It is no