M. SUNDARAAJAN Vs. EMPLOYEES' PROVIDENT FUND APPELLATE TRIBUNAL

JUDGEMENT

(1.) Aggrieved by Ext. P4 order imposing damages under section 14B of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952, issued by the 2nd respondent, the petitioner had preferred an appeal before the 1st respondent Tribunal under Section 7(i) of the said Act. Through Ext. P5 order the Tribunal had dismissed the appeal observing that the Central Board of Trustees alone has got power to waive or reduce the damages, under Section 32B of the Employees Provident Fund Scheme, 1952, and therefore the petitioner cannot escape from its liability solely on the ground of financial constrains. It is aggrieved by Ext. P5 order of the appellate tribunal, this writ petition is filed. On the facts contention of the petitioner is that, the industrial unit in question was not functioning since April 2005 onwards and even on earlier period it was run on loss for 3 consecutive years. Therefore it is contended that the delay in remittance of contributions was not deliberate but due to financial constrains.

(2.) Under section 14B of the Act when the employer makes default in payment of contributions or any charges payable under the Act or under the scheme, the authorized officer can impose penalty by way of damages not exceeding the amount of arrears, as may be specified in the scheme. Second proviso to Section 14B provides that the Central Board may reduce or waive the damages levied under this Section with respect to an establishment which is a 'sick industrial company' and with respect to which a scheme for rehabilitation has been sanctioned by the BIFR. Clause 32B of the EPF Scheme, 1952 enumerates the parameters for allowing such reduction or waiver. It is true that, apart from the said provisions which confers power on the Central Board for waiver or reduction, neither the determining authority nor the 1st respondent For Petitioners: Mr. O.P. Nandakumar and Mr. V.A. Ajai Kumar, Advocates. For Respondents: None. Tribunal has got statutory powers to allow such reduction. But it is to be noticed that penalty for failure to comply with statutory obligations need not ordinarily be imposed, unless the party obliged had acted deliberately in defiance of law or there is conduct of contumacious or dishonest nature. In the decision in Hindustan Steel Ltd. v. State of Orissa, 1970 AIR(SC) 253 the hon'ble apex court held that;

(3.) In a latest decision of this court in Sreekamakshy Agency (P) Ltd. v. Employees Provident Fund Appellate Tribunal and another, 2013 LLR 504 a learned judge of this court took the stand that, the authorities are under an obligation to consider levy of damages objectively, taking note of the peculiar facts and circumstances of each case. It is observed that if one has the money to pay and he deliberately withholds payment, there is scope for the authorities to impose damages. But if it is shown that one was under severe financial constrains oh account of reasons stated supported by documents produced, the authorities are bound to consider the same in a pragmatic manner and not taking a pedantic approach. The above observation is made referring to various decisions of the Hon'ble Supreme Court as well as decision of this court on the issue.