Kerala High Court
M/S. Karappuram White Limeshell ... vs Employees Provident Fund Organization on 30 September, 2020
Author: A.M.Badar
Bench: A.M.Badar
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE A.M.BADAR
WEDNESDAY, THE 30TH DAY OF SEPTEMBER 2020 / 8TH ASWINA, 1942
WP(C).No.2213 OF 2020(B)
PETITIONER:
M/S. KARAPPURAM WHITE LIMESHELL VYAVASAYA CO-
OPERATIVE SOCIETY LTD. NO. A144
MUHAMMA, ALAPPUZHA-688 525, REPRESENTED BY ITS
SECRETARY.
BY ADV. SRI.T.M.RAMAN KARTHA
RESPONDENTS:
1 EMPLOYEES PROVIDENT FUND ORGANIZATION
REPRESENTED BY THE CENTRAL PROVIDENT FUND
COMMISSIONER, BHAVISHYA NIDHI BHAVAN, 14-BHIKAJI CAMA
PLACE, NEW DELHI-110 066.
2 REGIONAL PROVIDENT FUND COMMISSIONER-I,
36/685 A, BHAVISHYANIDHI BHAVAN, KALOOR, KOCHI-682
017.
3 THE ASSISTANT PROVIDENT FUND COMMISSIONER AND
RECOVERY OFFICER,
EMPLOYEES PROVIDENT FUND ORGANISATION, REGIONAL
OFFICE, 36/685/A, BHAVISHYANIDHI BHAVAN, KALOOR,
KOCHI-682 017.
R1-3 BY SRI.SAJEEV KUMAR K. GOPAL, SC, EPFO
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 28-
09-2020, THE COURT ON 30-09-2020 DELIVERED THE FOLLOWING:
WP(C).No.2213 OF 2020(B)
2
JUDGMENT
Dated this the 30th day of September 2020 By this petition, the petitioner which is a Co-operative Society of Fishermen is challenging the order dated 05/11/2019 (Ext.P4) passed by the 2nd respondent - Regional Provident Fund Commissioner-I, thereby ordering the petitioner to pay an amount of Rs.19,48,178/- towards interest payable under Section 7Q of the Employees Provident Fund Miscellaneous Provisions Act, 1952 (EPF Act for the sake of brevity).
2. According to the petitioner, it enrolled 78 workers in the scheme under the EPF Act, in the year 1997 with retrospective effect from 01/04/1989. 140 members were also brought under the EPF Act with prospective effect from November 1997. The Enforcement Officer of the EPF organization had insisted to enroll eight ministerial staffs with effect from April, 1989. The establishment of the petitioner was not in a position to conduct the day to day activities and it was unable to pay contribution as per the provisions of the EPF Act. The petitioner filed WP(C).No.2213 OF 2020(B) 3 Writ Petition bearing number WP(C) No. 7964/2009 challenging the demand notice and ultimately, vide judgment dated 10.07.2017 in Writ Appeal No. 2084/2017, the same petition came to be dismissed.
3. The petitioner then was summoned to appear before the 2nd respondent Regional Provident Fund Commissioner - I, for showing cause as to why damages as envisaged by Section 14B and interest as envisaged by Section 7Q of the EPF Act should not be recovered from it. In pursuance to this summons, Ext.P2, the President of the petitioner-Society appeared before the 2nd respondent Regional Provident Fund Commissioner. After hearing the said authority, vide impugned order dated 05/11/2019 (Ext.P4), was pleased to direct the petitioner Society to pay interest amounting to Rs.19,48,178/- under Section 7Q of the EPF Act towards belated payment on the amount due and payable under the EPF Act.
4. The learned counsel for the petitioner vehemently argued that the impugned order (Ext.P4) is legally unsustainable, WP(C).No.2213 OF 2020(B) 4 because Section 7Q of the EPF Act was brought on the statute book with effect from 01/07/1997 and as such, the petitioner was not liable to pay any interest for alleged belated payment prior to 01/07/1997. The learned counsel argued that the impugned order shows that the interest was levied even prior to 01/07/1997 and therefore, the impugned order needs to be quashed and set aside.
5. The learned counsel for the petitioner, by placing reliance on paragraphs 5, 6 and 9 of the judgment of the Hon'ble Full Bench of Delhi High Court in the matter of Roma Henny Security Services (P) Ltd Vs. Central Board of Trustees, EPF Organization reported in 2013 (1) KLT SN 33 argued that once damages levied under Section 14B of the EPF Act are inclusive of interest payable under section 7Q thereof, additional interest cannot be levied under Section 7Q of the EPF Act. In submission of the learned counsel for the petitioner, in the case in hand, damages levied under section 14B of the EPF Act are inclusive of the interest chargeable under Section 7Q of the EPF Act and therefore, the impugned order is liable to be quashed WP(C).No.2213 OF 2020(B) 5 and set aside.
6. As against this, the learned counsel for the respondents argued that the petition is devoid of any substance as, the judgment of the Hon'ble Full Bench of Delhi High Court is set aside by the Hon'ble Supreme Court in Civil Appeal No. 6592/2014, (Central Board of Trustees Vs. Roma Henny Security Services (P) Ltd) decided on 27/02/2019. He further argued that undisputedly, there is delay in payment of interest and therefore, the petition is devoid of merit.
7. I have considered the submissions so advanced and have also perused the materials placed before me including the Order of the Hon'ble Full Bench.
8. It is not in dispute that the petitioner establishment is covered under the EPF Act with effect from 01/04/1989. Undisputedly, the enquiry was initiated for assessment of interest under Section 7Q of the EPF Act for belated payment of PF contribution, deposit link insurance fund contribution and incidental charges for the period from 01.04.1996 to 31.03.1999. WP(C).No.2213 OF 2020(B) 6 The summons (Ext.P2) was served on the petitioner society along with a detailed statement showing the month wise details of the belated remittance towards EPF dues. The petitioner-Society had not disputed the fact that there was delay in the remittance of PF contribution. The petitioner-Society has also not disputed the fact that, ultimately, the entire EPF dues in respect of the non- enrolled employees came to be paid by it by instalments in pursuance to the assessment order dated 10.02.2019. Non- enrollment of employees is also an undisputed fact. Once the establishment is covered by the EPF Act, it becomes the bounden duty of the employer to pay all dues under the Act on the date on which such amount becomes due. At this juncture, it is relevant to quote the provisions of Section 7Q of the EPF Act which reads thus:
"[7Q. Interest payable by the employer- The employer shall be liable to pay simple interest at the rate of twelve per cent per annum or at such higher rate as may be specified in the scheme on any amount due from him under this Act from the date on which the amount has become so due till the date of its actual payment".
WP(C).No.2213 OF 2020(B) 7
9. No doubt, the impugned order, Ext.P4, mentions that the interest under the provisions of Section 7Q of the EPF Act is levied for belated payment for the period from 01.04.1996 to 31.03.2019, the duly sworn affidavit of respondent-Provident Fund Organization makes it crystal clear that the interest payable under Section 7Q of the EPF Act has been calculated only with effect from 01.07.1997. Paragraph 30 of the statement filed by respondents 1 to 3 needs reproduction and it reads thus:
"With reference to Ground B it is submitted as the provision for levying interest under Section 7Q was introduced in the statute with effect from 01.07.1997 the respondent has levied interest for belated remittance levied for the delay caused after 01.07.1997. Interest under Section 7Q not levied for the delay prior to 01.07.1997 as is evident from the details with regard to period of delay indicated against each month in the Annexure to the Summons (Ext.P2/3 to Ext.P2/28). The details with regard to period of delay for the months from 04/1989 are reproduced below for clarifying the same.
WP(C).No.2213 OF 2020(B)
8
Month Due Date Date of Period of Period of
remittance Delay for delay for
calculatio calculation
n of of damages
interest
01/04/89 15/05/89 10/09/04 2628 days 5597 days
01/04/89 15/05/89 16/02/04 2421 days 5390 days
The extent of delay for computation of interest has been calculated only from 010/07/1997 onwards as the establishment is not liable to remit interest for the delay prior to 01/07/1997".
10. I see no reason to disbelieve the duly sworn testimony of the respondents categorically mentioning the fact that computation of interest is only from 01.07.1997 and the same is not covering any period prior to 01.07.1997. Therefore, challenge to the impugned order on this ground fails.
11. The next point urged by the petitioner is to the effect that the interest is already sought to be recovered by imposing penalty under Section 14B of the EPF Act. Upon a specific query made to the learned counsel for the petitioner, it is made to understand that as yet no appeal challenging the order under Section 14B of the EPF Act is filed by the petitioner. The penalty WP(C).No.2213 OF 2020(B) 9 levied as per the provisions of Section 14B of the EPF Act is not even paid by the petitioner as of date. A perusal of the judgment of the Hon'ble Full Bench of Delhi High Court in Roma Henny Security Services (P) Ltd's case (supra) makes it clear that, in the said case, damages payable under Section 14B of the EPF Act were already paid and on that premises, it was held that, no additional interest under Section 7Q of the EPF Act was payable. This finding given by the learned Single Judge, came to be approved by the Hon'ble Full Bench of the Delhi High Court. Moreover, the judgment of the Hon'ble Full Bench of Delhi High Court, in Roma Henny Security Services (P) Ltd's case (supra) is set aside by the Hon'ble Supreme Court in Civil Appeal No. 6592/2014 filed by the Central Board of Trustees and decided on 27/02/2019 as reported by the learned counsel for the respondents. The petitioner therefore, cannot take advantage of observations made in the said judgment and that too, without challenging the order imposing penalty under Section 14B of the EPF Act, before the appropriate forum. Section 7Q of the EPF Act unequivocally lays down the liability of the employer for WP(C).No.2213 OF 2020(B) 10 payment of interest on any amount due from him at the specified rate of interest.
The impugned order (Ext.P4), as such, cannot be faulted with, as the same is fully in consonance with the provisions of Section 7Q of the EPF Act. The petition as such is devoid of any merit and the same is dismissed.
Sd/-
A.M.BADAR
Nsd JUDGE
//true copy//
PA to Judge
WP(C).No.2213 OF 2020(B)
11
APPENDIX
PETITIONER'S/S EXHIBITS:
EXHIBIT P1 TRUE COPY OF THE JUDGMENT OF THIS HON'BLE
COURT IN WA NO.2084/2015 DATED
10.07.2017.
EXHIBIT P2 TRUE COPY OF THE SUMMONS FOR HEARING
DATED 25.09.2019 ISSUED BY 2ND
RESPONDENT.
EXHIBIT P3 TRUE COPY OF OBJECTION DATED 29.10.2019
FILED BY THE PETITIONER IN REPLY TO
EXT.P2 SUMMONS.
EXHIBIT P4 TRUE COPY OF ORDER DATED 05.11.2019
ISSUED BY THE 2ND RESPONDENT.