Telangana High Court
The Assistant Provident Fund ... vs The Emploees Provident Fund Appellate ... on 5 June, 2023
Author: K. Lakshman
Bench: K. Lakshman
IN THE HIGH COURT FOR THE STATE OF TELANGANA
AT: HYDERABAD
CORAM:
*HON'BLE SRI JUSTICE K. LAKSHMAN
+ WRIT PETITION Nos.27577, 1336 AND 719 OF 2010
% Delivered on: 05-06-2023
Between in W.P. No.27577 of 2010:
# The Assistant Provident Fund Commissioner,
(Authority u/s.14B of the Provident Fund Act, 1952),
Patancheru 502 319 & 2 others. .. Petitioners
Vs.
$ The Employees' Provident Fund Appellate Tribunal
New Delhi & another .. Respondents
! For Petitioners : Mr. G. Venkateshwarlu,
Learned Standing Counsel
^ For Respondents : 1. Mr. P. Balaji Varma
2. Mr. Kamatham Govardhan Reddy
< Gist :
> Head Note :
? Cases Referred :
1. 2022 SCC OnLine SC 159
2. (1966) 3 SCR 856
3. Judgment in W.A.No.2182 of 2006, decided on 28.08.2008
4. (2022) 4 SCC 516
2
KL,J
W.P. No.27577 of 2010 & batch
HON'BLE SRI JUSTICE K. LAKSHMAN
WRIT PETITION Nos.27577, 1336 AND 719 OF 2010
COMMON ORDER:
Heard Mr. G. Venkateshwarlu, learned Standing Counsel appearing on behalf of the petitioners, Mr. P. Balaji Varma, learned counsel for respondent No.2 in W.P. Nos.1336 and 719 of 2010 and representing Mr. Kamatham Govardhan Reddy, learned counsel for respondent No.2.
2. All the above writ petitions are filed to issue a writ of certiorari calling for the records relating to the order, dated 06.07.2007 (which was received on 15.09.2010 in W.P. No.27577 of 2010) passed in Appeal ATA Nos.84 (1)/2005, 756(1)/2006 and 928(1)/2005, respectively, and quash the same by declaring the same as illegal.
3. Lis involved in all these writ petitions and parties except respondent No.2 in W.P. No.27577 of 2010 are one and the same and, therefore, they are being disposed of by way of this common order.
4. For the sake of convenience, the parties as arrayed in W.P. No.27577 of 2010 will be hereinafter referred to. 3
KL,J W.P. No.27577 of 2010 & batch
5. FACTS:
i) Respondent No.2 in all the writ petitions is a Company and it is covered under the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (for short 'Act, 1952').
ii) Respondent No.1 had passed orders dated 29.09.2004, 08.12.2006 and 6.10.2005 under Section - 14B of the Act, 1952, levying an amount of Rs.10,18,558/-; Rs.2,74,615/- and Rs.5,41,226/-
for the period from July, 1998 to February, 2004; from November and January, 2005 to March, 2006 and from April, 2000 to December, 2004, respectively, towards damages for the default committed by respondent No.2. Further, an amount of Rs.1,04,227/- was levied towards interest under Section - 7Q of the Act, 1952 for the period from November, 2001 and January, 2005 to March, 2006 in W.P. No.1336 of 2010.
iii) Feeling aggrieved by the said orders, respondent No.2 in all the writ petitions had preferred appeals vide ATA Nos.84 (1)/2005, 756(1)//2006 and 928(1)/2005, respectively before respondent No.1 under Section - 7I of the Act, 1952.
iv) Vide order dated 06.07.2007, respondent No.1 reduced the damages up to 70% as assessed by petitioner No.1 in the impugned 4 KL,J W.P. No.27577 of 2010 & batch orders dated 29.09.2004 and 06.10.2005 respectively. Assailing the said order, petitioner No.1 filed the present writ petitions.
6. Contentions of the Petitioner (s):
According to Mr. G. Venkateshwarlu, learned Standing Counsel appearing for the petitioners, respondent No.1 has no power to reduce the damages and it is the Central Board of Trustees which has power to reduce or waive the damages levied under Section - 14B of the Act, 1952. Respondent No.2 instead of making an application to the said Central Board of Trustees seeking waiver or reduction of the damages, filed the aforesaid appeals, and without considering the said aspects, respondent No.1 has allowed the said appeals filed by respondent No.2 reducing the damages up to 70% as assessed by petitioner No.1. Thus, the impugned order is illegal and contrary to the law laid down by the Hon'ble Supreme Court and, therefore, he sought to set aside the impugned orders.
7. Contentions of respondent No.2:
Mr. P. Balaji Varma, learned counsel appearing on behalf of respondent No.2, would submit that respondent No.1 has power to set aside or modify the order passed by petitioner No.1 under Section - 14B of the Act, 1952 in terms of the provisions of the Act, 1952. 5
KL,J W.P. No.27577 of 2010 & batch Respondent No.1 has also power to reduce or waive the damages imposed by petitioner No.1 in exercise of its powers under Section - 7I of the Act, 1952. Accordingly, considering the factual aspects, respondent No.1 reduced 70% of the damages vide impugned orders, and there is no error in it. Even then, the petitioners filed the present writ petitions and, therefore, he sought to dismiss the writ petitions.
8. Analysis and Finding of the Court:
i) In View of the aforesaid rival submissions, the only issue that falls for consideration before this Court is:
Whether the Employees Provident Fund (EPF) Appellate Tribunal has power to reduce damages levied by EPF Organization under Section - 14B of the Act, 1952?
ii) It is relevant to note that against an order passed under Section - 14B of the Act, 1952 levying damages, an appeal lies before the EPF Appellate Tribunal under Section - 7I of the Act, 1952.
Section 7-L of the Act, 1952 deals with 'orders of Tribunal. As per Section 7-L, a Tribunal may after giving the parties to the appeal, an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or annulling the order appealed against or may refer the case back to the authority which passed such order with such 6 KL,J W.P. No.27577 of 2010 & batch directions as the Tribunal may think fit, for a fresh adjudication or order, as the case may be, after taking additional evidence, if necessary. Therefore, the Tribunal has power to confirm, modify or annul the order passed by petitioner No.1.
iii) It is apt to extract paragraph No.32-B of the Employees' Provident Funds Scheme, 1952 (for short 'Scheme, 1952') and the same is as under:
"32B. Terms and conditions for reduction or waiver of damages- The Central Board may reduce or waive the damages levied under section 14B of the Act in relation to an establishment specified in the second proviso to section 14B, subject to the following terms and conditions, namely:--
(a) in case of a change of management including transfer of the undertaking to workers' co-operative and in case of merger or amalgamation of the sick industrial company with any other industrial company, complete waiver of damages may be allowed;
(b) in cases where the Board for Industrial and Financial Reconstruction, for reasons to be recorded in its schemes, in this behalf recommends, waiver of damages up to 100 per cent may be allowed;
(c) in other cases, depending on merits, reduction of damages up to 50 per cent may be allowed."7
KL,J W.P. No.27577 of 2010 & batch Thus, it is the Central Board which has power to reduce or waive damages levied under Section - 14B of the Act, 1952. There is a specific provision under the Scheme, 1952 with regard to waiver or reduction of damages. Therefore, the EPF Appellate Tribunal has no power to reduce or waive damages levied by the Authority under Section - 14B of the Act, 1952.
iv) It is relevant to note that when a Statute prescribes a particular procedure to be followed, it has to be followed in its strict sense. The said principle is also laid down by the Hon'ble Supreme Court in State of Telangana v. A.P. State Wakf Board1 and Ramchand and Sons Sugar Mills Private Ltd. v. Kanhayalal Bhargava2.
v) Though EPF Appellate Tribunal has power to confirm, modify or annul the order in an appeal, in view of paragraph No.32B of the Scheme, 1952, it cannot reduce or waive damages.
vi) In the impugned order, respondent No.1 Tribunal having referred to the principle laid down by the Apex Court in M/s. Hindustan Steel Ltd. V. State of Orissa [AIR 1970 SC 253] and the 1 . 2022 SCC OnLine SC 159 2 . (1966) 3 SCR 856 8 KL,J W.P. No.27577 of 2010 & batch Kerala High Court in Indian Telephone Industries Ltd. V. APFC [2006 (3) KLJ 698] failed to consider the fact that the principle laid down in the said judgments is altogether different to the facts of the present case. The Appellate Tribunal also having referred to paragraph No.32B of the Scheme, 1952, reduced the damages to 70%. Therefore, according to this Court, the Appellate Tribunal has no power to reduce or waive the damages imposed by petitioner No.1 under Section - 14B of the Act, 1952.
vii) As against the aforesaid order, a writ appeal is preferred i.e., Assistant Provident Fund Commissioner v. Indian Telephone Industries Ltd.3, wherein a Division Bench of Kerala High Court held that the Act provides for consideration of an application for waiver of the damages by the Central Board of Trustees. What requires to be done by an authority under the Act requires to be done only by that authority and it cannot be done by any other person. When the Legislature says that an application for waiver of the damages requires to be considered only by the Central Board of Trustees, it is that authority alone which has to consider the application. In the said case, the applicant filed the writ petition to 3 . Judgment in W.A.No.2182 of 2006, decided on 28.08.2008 9 KL,J W.P. No.27577 of 2010 & batch declare that it is not liable to pay damages and learned Single Judge granted the said declaration. The Division Bench set aside the order passed by the learned Single Judge on the ground that a proceeding under Article - 226 of the Constitution of India cannot have any analogy to what is known as declaratory relief. The writ jurisdiction cannot be exercised for the purpose of granting merely declaratory reliefs, though it cannot be laid down as an axiom that no kind of declaration can be given by way of relief under Article 226.
viii) It is relevant to note that if respondent No.2 is facing financial difficulties/hardships, if it wants reduction or waiver of damages, it has to make an application in terms of paragraph No.32B of the Scheme, 1952 to the Central Board. Instead of doing so, it sought for reduction or waiver of damages before EPF Appellate Tribunal.
ix) In fact, in Horticultural Experiment Station, Gonikoppal, Coorg v. Regional Provident Fund Organization4 the Apex Court referring to its earlier judgments held that mens rea is not an essential element for imposing penalty for breach of civil obligations or liabilities. In paragraph No.13 of the said decision, the Apex Court
4. (2022) 4 SCC 516 10 KL,J W.P. No.27577 of 2010 & batch also extracted paragraph No.35 of the decision in SEBI v. Cabot International Capital Corpn. [(2005) 123 Comp Cas 841 (Bom)], which is as under:
".........
35. In our considered opinion, penalty is attracted as soon as the contravention of the statutory obligation as contemplated by the Act and the Regulations is established and hence the intention of the parties committing such violation becomes wholly irrelevant. A breach of civil obligation which attracts penalty in the nature of fine under the provisions of the Act and the Regulations would immediately attract the levy of penalty irrespective of the fact whether contravention must be made by the defaulter with guilty intention or not. We also further held that unless the language of the statute indicates the need to establish the presence of mens rea, it is wholly unnecessary to ascertain whether such a violation was intentional or not. On a careful perusal of Section 15-D(b) and Section 15-E of the Act, there is nothing which requires that mens rea must be proved before penalty can be imposed under these provisions. Hence once the contravention is established then the penalty is to follow." [Emphasis Supplied].
In paragraph No.19 of the decision, the Apex Court held as under:
"19. Taking note of three-Judge Bench judgment of this Court in Union of India and Others v. Dharmendra Textile Processors and others (supra), which is indeed binding on us, we are of the considered view that any default or delay in the payment of EPF contribution by the employer under the Act is a sine qua non for imposition of levy of damages under Section 14B of the Act 1952 and mens rea or actus reus is not an essential element for imposing penalty/damages for breach of civil obligations/ liabilities."
x) It is relevant to note that in the order dated 29.09.2004 passed by petitioner No.1 under Section - 14B of the Act, 1952, there 11 KL,J W.P. No.27577 of 2010 & batch is specific mention with regard to the powers of Authority in accepting the contention of respondent No.2 with regard to levying of lesser penalty than prescribed in paragraph No.32A of the Scheme, 1952 and also referred the written submissions made by respondent No.2 dated 16.07.2004. It appears that respondent No.2 sought to levy lesser penalty before petitioner No.1 during inquiry under Section - 14B of the Act, 1952 and the same was rejected. As discussed above, for the purpose of waiver or reduction of damages, respondent No.2 has to make an appeal to the Central Board in terms of paragraph No.32B of the Scheme, 1952. Therefore, according to this Court, the order dated 29.09.2004 passed by petitioner No.1 under Section - 14B of the Act, 1952 is a reasoned order.
9. Conclusion:
i) Viewed from any angle, the impugned orders dated 06.07.2007 passed in Appeal ATA Nos.84 (1)/2005, 756(1)/2006 and 928(1)/2005 respectively by the Appellate Tribunal - respondent No.1 are not on consideration of the actual facts, provisions of the Act, 1952 and the principle laid down by the Apex Court and, therefore, the same are liable to be set aside.12
KL,J W.P. No.27577 of 2010 & batch
ii) All the aforesaid writ petitions are accordingly allowed. In the circumstances of the case, there shall be no order as to costs.
As a sequel, the miscellaneous petitions, if any, pending in the writ petitions shall stand closed.
_________________ K. LAKSHMAN, J 5th June, 2023 Note:
L.R. Copy be marked.
(B/O.) Mgr