2023 LLR 341
KERALA HIGH COURT
Hon'ble Mr. Amit Rawal, J.
WP (C) No. 392/2022, Dt/– 2-11-2022
Centre for Water Resources Development and Management (CWRDM)
vs.
Assistant Provident Fund Commissioner
EMPLOYEES' PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 – Section 14B and 7Q – Petitioner did not deposited EPF contributions on the ground that employees enrolled were 20 which would not fall under the Act – EPF Authority when inspected the established, pointed out that established was covered by order on 17.10.2018 to cover employees who joined after 01.04.2013 – EPF Authority assessed EPF contributions directing the petitioner to pay the same – Petitioner remitted the contributions – Then EPF Authority imposed 100 damages under section 14B of the Act for delayed remittance – In appeal, damages were reduced to 60% – Petitioner moved in writ petition – Held, order under section 7A of the Act – EPF assessed was paid – Thus petitioner cannot take a plea that employees were falling under the Scheme, not liable for EPF contributions – Non-payment would entail into proceedings under section 7Q and 14B of the Act – It is not necessary for EPF Authority to blindly impose damages to 100% – If the concern was actually running into losses, damages can be minimized 25% – Petitioner has deposit of Rs. 1,78,466/- on or before 31.01.2021 – Petitioner was not running in losses, to reduce damages from 60% to 25% – Petitioner is at liberty to deposit remaining amount in six equal monthly instalments commencing from 01.12.2022 – In case of three perpetual defaults respondents shall be at liberty to take actions in accordance with law. Para 5
For Petitioner: Mr. T.D. Susmith Kumar, Mr. C. Sivadas and Mr. T.O. Deepa, Advocates.
For Respondents (EPF): Dr. Abraham P. Meachinkara, SC.
IMPORTANT POINTS
JUDGMENT
Amit Rawal, J.–1. Petitioner, an establishment covered under the EPF & MP Act and allotted an EPF number, during the course of the business, have been inspected and found to have not made any contribution towards the employees.
2. There were twenty employees enrolled from 03.08.2015 to 23.02.2018, so would not fall under the definition of employees but would be excluded employees as envisaged under section 2(ff) of the EPF & MP Act, 1952. However, were brought within the EPF scheme as there was no other social security scheme and this was acknowledged by Kerala State Council for Science, Technology and Environment (KSCSTE) which passed an order on 17.10.2018 directing to enroll all the employees who joined after 01.04.2013 in the EPF scheme by limiting the employer's share of PF contribution to 12% of Rs. 15,000/- vide Ext. P3. Petitioner remitted the EPF contribution of the twenty(20) number of employees, of Rs. 17,38,526/- (Rupees Seventeen lakh thirty eight thousand five hundred and twenty six only) on 21.01.2019 and 22.01.2019. Therefore there was no willful negligence or delay on the part of the petitioner in making the contribution. A show cause notice dated 22.05.2019 was issued under section 14B of the 1952 Act calling upon the petitioner to make the deposit of damages.
3. It is contended on behalf of the petitioner that once the employees were falling under the Scheme, there was no liability of making contribution under the 1952 Act. The assessing authority assessed the damages to the extent of 100% but in appeal has been reduced to 60%. The said amount is also on a higher side as petitioner is not a profit making concern.
4. On the other hand, learned counsel for the respondents opposed the aforementioned prayer and submitted that once the proceeding under section 7A attained finality, petitioner cannot be permitted to submit that the employees were not covered under the Act owing to their enrollment under EPF Act.
5. I have heard learned counsel for the parties and appraised the paperbooks.
6. It is a matter of record that an order under section 7A of the EPF & MP Act, 1952 was passed assessing the liability on behalf of the petitioner which has been honoured. In this view of the matter petitioner cannot be permitted to volt face and take a plea that the employees were falling under the scheme and therefore not liable for contribution under the provisions of 1952 Act. Non-payment of the contribution would entail into initiation of proceedings under section 7Q and 14B of the 1952 Act. In other words, they are inevitable and accordingly the authorities initiated action. For assessing the damages under section 14B, it is not necessary for the authorities to blindly apply the provisions of the Act and impose damages to the extent of 100%, but other attenuating circumstances supported by the documents on the point that if the concern was actually running into losses can be minimized 25%. The assessing authority assessed the damages under section 14B of the 1952 Act to the tune of Rs. 5,94,887/- (Rupees Five lakh ninety four thousand eight hundred and eighty seven only). In appeal aforementioned amount has been reduced to the extent of 60%.
6. This Court while admitting the writ petition had granted the interim protection to the petitioner subject to deposit of Rs. 1,78,466/- (Rupees One lakh seventy eight thousand four hundred and sixty six only) on or before 31.01.2021. Learned counsel for the respondents do not deny the factum of deposit of the same. However, no substantial arguments have been made supported by any documents that the company was running in losses, impelling this court to reduce further damages from 60% to 25%. At the best this Court can grant liberty to the petitioner to deposit the same in some instalments. While upholding the order under challenge reducing the damages from 100% to 60% and since 50% of the reduced damages had already been deposited, the balance amount of Rs. 1,78,466/- is ordered to be deposited in six equal monthly instalments commencing from 01.12.2022. In case of three perpetual defaults respondents shall be at liberty to take actions in accordance with law.
Writ petition stands disposed of with the aforementioned directions.