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Petitioner aggrieved by the order dated 19.5.2004 of the Regional Provident Fund Commissioner, determining ì.91,54,160/- as damages under Section 14-B of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 (for short 'the EPF Act') preferred W.P.No.14338/2005 whence a learned Single Judge by order dated 17th August 2007 - Annexure-B while quashing the endorsement dated 31.1.2005 of the Regional Provident Fund Commissioner, remitted the proceeding to the Central Board of Trustees, Employees' Provident Fund Organization, for re-consideration and until such time directed the Regional Provident Fund Commissioner not to precipitate any matter pursuant to the order dated 19.5.2004. The Central Board of Trustees rejected the petitioner's request for waiver of damages, in the light of the legal and factual position by letter dated 1st September 2008 - Annexure-C. Petitioner carried orders of the Central Board of Trustees and the Regional Provident Fund Commissioner in ATA No.861(6)/2008 before the Employees' Provident Funds Appellate Tribunal, which dismissed the appeal by order dated 12th January 2009 on the premise that Section 7-I of the Act was inapplicable. That order was called in question in W.P.No.12078/2009, whence a learned Single Judge by order dated 16th June 2010 - Annexure-F allowed the petition, quashed the order of the Appellate Tribunal and remitted the proceeding for fresh consideration.

11. Having heard the learned Counsel for the parties, examined the orders impugned and the provisions of the Employees State Insurance Act, 1948, for short 'ESI Act'; the Employees State Insurance 3 AIR 1997 SC 3645 (General) Regulations 1950, for short 'ESI Regulations'; The 'EPF Act' and the 'EPF Scheme', what is apparent is, both enactments are social welfare legislations intended to provide social security cover to its members, dependent upon prompt compliance by employers.

(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. "

15. The provisions of Section 85-B of the E.S.I. Act read with Regulation 31-C of the ESI (General) Regulations, 1950, relate to recovery of damages for failure of the employer to pay contributions while Section 14-B of the EPF Act read with paragraphs 32-A and 32-B of the EPF Scheme, also relate to recovery of damages for default in payment of any contribution. The aforesaid provisions are pari materia relating to the recovery of damages by way of penalty for failure of the employer in not paying the contributions. The rates of damages and the terms and condition for reduction or waiver of damages are identical, while the statutes state "may recover".

18. Applying the very same principles to the provisions of the EPF Act i.e. Sec. 14-B and paragraphs 32-A & 32-B of the EPF scheme, it cannot but be construed as being directory and not mandatory, while the levy of damages by way of penalty is discretionary and not imperative in all situations, and the use of the words "May recover" in Sec. 14-B, the legislature having limited the jurisdiction to levy damages not exceeding the arrears, the said section must be construed regard being had to the language deployed and not dehors the same. Thus paragraphs 32-A & 32-B cannot have overriding effect on Sec. 14-B the legislative provision. In the view taken by the Apex Court in HMT's case supra, existence of mens rea or actus reus to contravene Section 14-B must be held to be a necessary ingredient for levy of damages and for the quantum thereof.