Karnataka High Court
J S S Institute Of Economic Research And ... vs The Regional Provident Fund ... on 20 April, 2017
Author: Vineet Kothari
Bench: Vineet Kothari
IN THE HIGH COURT OF KARNATAKA
DHARWAD BENCH
DATED THIS THE 20TH DAY OF APRIL 2017
BEFORE
THE HON'BLE DR. JUSTICE VINEET KOTHARI
WRIT PETITION No.67500/2010(L-PF)
BETWEEN:
J.S.S. INSTITUTE OF ECONOMIC
RESEARCH AND POPULATION RESEARCH
CENTRE, VIDYAGERI,
DHARWAD
REP. BY ITS DIRECTOR DR.P.K.BHARGAVA,
S/O DR/ RADHA MOHAN BHARGAVA,
AGE ABOUT 59 YEARS,
R/O DHARWAD.
... PETITIONER
(BY SRI. V.M. SHEELVANT, ADV.)
AND:
THE REGIONAL PROVIDENT FUND
COMMISSIONER, 4TH FLOOR,
SHRINATH COMPLEX,
NEW COTTON MARKET,
HUBLI-580029.
... RESPONDENT
(BY SRI. P.V. GUNJAL, ADV.)
THIS WRIT PETITION IS FILED UNDER ARTICLES
226 AND 227 OF CONSTITUTION OF INDIA PRAYING TO
Date of Order: 20.04.2017 in WP No.67500/2010(L-PF)
JSS Institute of Economic Research & Population Research Centre
Vs. The RPF Commissioner, Hubli
:2:
QUASH THE ORDER DATED 14.9.2004, PASSED BY THE
RESPONDENT, PRODUCED AT ANNEXURE-K AND THE
ORDER DATED 24.08.2010 PASSED BY THE
EMPLOYEES PROVIDENT FUND APPELLATE
TRIBUNAL, NEW DELHI IN ATA NO.689(6) 2005,
PRODUCED AT ANNEXURE-W.
THIS WRIT PETITION COMING ON FOR HEARING
THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
Mr.V.M. Sheelavant, Adv. for the petitioner. Mr.P.V. Gunjal, Adv. for the respondent.
1. This writ petition is directed against the order dated 24.08.2010 passed by the Employees' Provident Fund Appellate Tribunal (for short, 'Tribunal') in ATA No.689(6)2005.
2. The learned Tribunal below upheld the levy of the "damages" under Section 14B of the EPF Act, giving the following reasons:
" 6. The applicability of the EPF Act is not disputed. Under Section 1(4), the PF Commissioner has the power to cover an establishment with retrospective effect from the Date of Order: 20.04.2017 in WP No.67500/2010(L-PF) JSS Institute of Economic Research & Population Research Centre Vs. The RPF Commissioner, Hubli :3: date of the application of the Act or voluntary coverage so the giving retrospective effect to the notification is not illegal one. It is true that the mere delay in depositing the EPF dues in time is not sufficient to attract Section 14B, if the reason for delay is beyond the control of the appellant. In the case in hand, it is evident that the delay was due to the administrative reasons. The administrative reasons are not a sufficient ground justifying the delay in depositing the EPF dues.
7. Thus, in view of the discussion held above, since, the administration reason is not a sufficient ground justifying the delay in depositing the EPF dues, the order of the EPF Authority seems to be correct one and there is no inconsistency noticed in the order of the Authority. Hence ordered, in terms of the above, the appeal is dismissed. Copy of the order be sent to both the parties. File be consigned to record room.
Sd/-
(Srikant Nayak) Presiding Officer. "
3. Learned counsel for the petitioner, Mr. V.M. Sheelvant, submits that this Court, recently in the case of Date of Order: 20.04.2017 in WP No.67500/2010(L-PF) JSS Institute of Economic Research & Population Research Centre Vs. The RPF Commissioner, Hubli :4: Belgaum Co-operative Cotton Spinning Mills Ltd. Vs. The Regional Provident Fund Commissioner, WP No.67510/2010(L-PF), decided on 6.4.2017, has held that the levy of the "damages" under Section 14B of the EPF Act is not mandatory and the reasons assigned for delay in depositing the PF contribution have to be discussed and dealt with by the learned Tribunal.
4. This Court in the aforesaid case has held as under:
" 7. A bare perusal of the provisions of the said Section 14B of the Act indicates that the Provident Fund Commissioner or the appellate body / Tribunal have the discretion while deciding the cases under Section 14B of the Act which empowers the respondent Department to recover the damages on account of delay in payment of the Provident Fund contributions to recover such penalty by way of damages or not. This is not recovery of the provident fund contribution itself, but "damages"
to be recovered in the form of penalty on account of the delayed payments as per the provisions under Clause 32A of the Employees' Provident Funds Scheme, 1952 (for short 'the Scheme') read with Section 14B of the Act, which is also quoted below for ready reference:
" 32A. Recovery of damages for default in payment of any contribution: (1) Where an employer makes default in the payment of any contribution to the Fund, or in the Date of Order: 20.04.2017 in WP No.67500/2010(L-PF) JSS Institute of Economic Research & Population Research Centre Vs. The RPF Commissioner, Hubli :5: transfer of accumulations required to be transferred by him under sub-section (2) of section 15 or sub-section (5) of section 17 of the Act or in the payment of any charges payable under any other provisions of the Act or Scheme or under any of the conditions specified under section 17 of the Act, the Central Provident Fund Commissioner or such officer as may be authorised by the Central Government by notification in the Official Gazette in this behalf, may recover from the employer by way of penalty, damages at the rates given below:--
TABLE . .
Sl. Period of default Rate of damages
No. (percentage of
. arrears per annum) .
.(1) (2) (3) .
(a) Less than 2 months Five
(b) Two months and above
but less than four months Ten
(c) Four months and above
but less than six months Fifteen
. (d) Six months and above Twenty Five "
8. Clause 32A of the Scheme thus provides for the graded rates of damages to be recovered on the delayed payment of the provident fund contributions giving the periods of such delay in different slabs.
9. While the guideline about the grading of the rates of 'damages' or penalty under Clause 32A of the Date of Order: 20.04.2017 in WP No.67500/2010(L-PF) JSS Institute of Economic Research & Population Research Centre Vs. The RPF Commissioner, Hubli :6: Scheme is not in dispute, the very fact whether such 'damages' are liable to be recovered or not, depends upon the fair exercise of discretion vested in the authorities under the Act and the appellate body, namely the Tribunal or Central Board. It is only after the conclusion to levy the penalty or damages under Section 14B of the Act is fairly arrived, discussing the relevant reasons and the defences that for determining only the quantum of such damages, Clause 32A of the Scheme should be applied. But, 32A of the Scheme is not a charging provision in itself. It does not mandate the levy of damages itself. It is only a guideline for quantification to avoid varied levy of damages by different authorities. Clause 32A of the Scheme can neither override nor it does the basic statutory provisions of Section 14B of the Act itself.
10. A perusal of the above extracted portions of the impugned order shows that the said Tribunal has mechanically held that the reasons in the form of 'financial crunch' is not sufficient reasons to waive the levy of damages under Section 14B of the Act. It has not even discussed the effect of the petitioner undertaking being declared as 'Relief Undertaking' under the special statute, nor the details of the reasons resulting in such financial crunch rendering the payment of provident fund contributions along with the contributions of the employer also, are discussed. The order of the Appellate Authority cannot be held to be sufficiently meeting with the principles of natural justice and does not reflect a fair exercise of the discretion vested in the higher appellate body. The impugned order of the Tribunal, therefore, is liable to be set aside.
Date of Order: 20.04.2017 in WP No.67500/2010(L-PF) JSS Institute of Economic Research & Population Research Centre Vs. The RPF Commissioner, Hubli :7:
11. The Writ Petition is accordingly allowed and setting aside the impugned order dated 24th August 2010 passed by the Employees' Provident Fund Appellate Tribunal, New Delhi, Annexure 'H', the matter is remanded back to the learned Tribunal for decision afresh in accordance with law.
12. The petitioner-Society will also be at liberty to furnish appropriate details with relevant evidence during the course of such rehearing of the appeal by the Tribunal and the said Tribunal is expected to discuss all such reasons in detail and then pass appropriate orders according to law, within a period of six months from today.
The petitioner may appear before the Tribunal, in the first instance, on 24th April 2017 (Monday). "
5. Learned counsel for the respondent-PF Commissioner, Mr. P.V.Gunjal, however, submitted that no sufficient reasons were assigned by the petitioner for delay in depositing the PF contributions.
6. Having heard the learned counsel for the parties, this Court is satisfied that a short order passed by the learned Date of Order: 20.04.2017 in WP No.67500/2010(L-PF) JSS Institute of Economic Research & Population Research Centre Vs. The RPF Commissioner, Hubli :8: Tribunal impugned in the present writ petition is a non-
speaking order and does not deal with the reasons assigned by the petitioner.
7. The matter therefore, deserves to be sent back to the learned Tribunal for decision afresh in accordance with law including the judgment cited supra.
8. The writ petition is disposed of in the same terms.
No order as to costs.
9. The petitioner herein may appear before the learned Tribunal in the first instance on 15.05.2017.
Sd/-
JUDGE JTR