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- company in three installments. Thereafter, EPF authorities proceeded to issue a show cause notice relating to assessment of interest as well as damages under Sections 7Q and 14B of EPF Act on 26.06.2009. 2nd respondent - company did not respond to the show cause notice dated 26.06.2009. Consequently, competent authority determined the interest as well as damages to the tune of Rs. 13,72,054 (interest) and Rs.31,72,988/- (damages). 2nd respondent-company deposited interest portion of Rs.13,72,054/- on 16.09.2009. Whereas levying of damages is concerned, 2nd respondent-company filed an appeal before the EPFAT and appeal was dismissed on 17.08.2011. Consequently, 2nd respondent - company filed rectification application and it was entertained by the EPFAT and allowed the 2nd respondent's appeal on 17.10.2012 with reference to the principle of mens rea. Hence, present petition.

i) The Chairman, SEBI vs. Shriram Mutual Fund and another reported in AIR 2006 SC 2287 (Para No.16);
ii) Regional Provident Fund Commissioner vs. Bharat Plywood and Timber (Pvt.) Ltd. reported in 1980, Lab IC 446 (Kerala);

iii) Regional Provident Fund Commissioner vs. M/s Nijjar Agro Foods Ltd. and another - CWP No. 9048 of 2011, decided by this Court on 03.11.2017.

4. On the other hand, learned counsel for the 2nd respondent - company while resisting the contentions of the petitioner, submitted that beneficiaries were not identified, therefore, question of levying damages may not be correct in view of the fact that 2nd respondent has already deposited EPF amount determined under Section 7A of EPF Act. It was further contended that principle of mens rea is attracted and it has been appreciated by the EPFAT in para no.10 while doing so quoted Supreme Court's decision, namely, Employees' State Insurance Corporation vs. HMT Ltd. and another, (2008) 3 SCC 35. The EPFAT has also taken note of that no inquiry or finding of fact relating to willfully and deliberately withheld the PF contribution by the 2nd respondent-company has been examined, therefore, rightly EPFAT held that levying damages on the 2nd respondent is not appropriate and so also taken note of that 2nd respondent is 3 of 14 not a willful defaulter. Hence, no interference is called for in respect of EPFAT's decision dated 17.10.2012. Learned counsel for 2nd respondent relied on the following decisions:-

8. Petitioner contended that EPF contribution was not timely remitted for the period from April 2002 to August 2008 and it is not disputed by the 2nd respondent - company and they have remitted EPF contribution as well as interest. Moreover, 2nd respondent - company did not reply to the show cause notice issued under Section 14-B of EPF Act. In other words, they have not utilized the opportunity of submission of explanation. Under what circumstances, levy of damages should be waived of in particularly with reference to 2nd proviso to Section 14-B of EPF Act. In the absence of submission of reply / say to the show cause notice under Section 14-B of EPF Act, 2nd respondent - company cannot contend that doctrine of mens rea is attracted. Having regard to the conduct of the 2nd respondent - company in not submitting explanation to show cause notice issued under Section 14-B of EPF Act, principle of mens rea not at all attracted, merely on the ground that in 7-A proceedings beneficiaries were not identified. Reducing or waiver of damages are permissible only under provisions of Section 14-B of EPF Act. 2nd respondent had cited a decision, namely, Employees State Insurance Corporation (cited supra) and other decisions (i), (ii) and (iii) are not helpful to the 2nd respondent - company having regard to the fact that 2nd respondent - company has not utilized the opportunity in submitting the explanation to show cause notice issued under Section 14-B of EPF Act. Moreover, even in the present petition, 2nd respondent - company has not made out a case so as to waive of the damages levied in particularly with reference to 2nd proviso to Section 14-B 6 of 14 of EPF Act. In fact, EPFAT has failed to take note of whether the 2nd respondent - company's grievance would fall under the 2nd proviso to Section 14-B or not. The criteria mentioned under 2nd proviso to Section 14- B has not been made out with factual aspects. Thus, EPFAT has erred in not appreciating the conduct of the 2nd respondent-company in not furnishing explanation read with 2nd proviso to Section 14-B of EPF Act.

Even assuming that principle of mens rea is taken into consideration, it should be within the ambit of 2nd proviso to Section 14-B of EPF Act. That apart conduct of 2nd respondent - company is to be taken into consideration like not participated in the determination of damages and interest under statutory provisions of EPF Act. In view of these factual and legal aspects, EPFAT erred in entertaining rectification application while allowing the appeal. Accordingly, EPFAT order dated 17.10.2012 vide Annexure P/18 is set aside.