ASSISTANT PROVIDENT FUND COMMISSIONER Vs. SALEM TEXTILES LIMITED

JUDGEMENT

(1.) The Writ Petition is filed by the Employees' Provident Fund Organisation ('E.P.F.O' for short) aggrieved by the order, dtd. 2/7/2020 passed by the Employees' Provident Fund Appellate Tribunal in E.P.F.A.No.38 of 2019. By the said order, the appeal filed by the respondent, M/s.Salem Textiles Limited was partly allowed. By the said order, the Tribunal interfered with the quantum of damages levied under Sec. 14B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter 'P.F Act').

(2.) The respondent is a Textile Yarn Spilling Mill. It is their case that the mill was started in the year 1967. Its P.F Code Number is TN/6517. From March 1997, due to the recession, the business went downhill. The management was not in a position to pay the salaries of the workmen. The payment of the salary and also P.F contribution to E.P.F.O was delayed. In the meanwhile, the mill was declared as a sick unit. Subsequently, with effect from 25/11/2014, the properties of the mill were taken over by its bankers under the provisions of the SARFAESI Act. The mill made continuous losses from the year 1997 up to the year 2016. The properties were sold by the bankers and subsequently, the Asset Reconstruction Companies. While so, by the order, dtd. 29/10/2018, a sum of Rs.8,46,51,183.00 was levied as damages and after adjusting a sum of Rs.1,45,37,782.00, the balance sum of Rs.7,01,13,401.00 was ordered to be paid, as against which the appeal, is filed. The authorities omitted to take into account that the entire dues were already recovered. There was a great recession in the Textile Industry. The mill was declared as a sick unit and it made continuous loss. The assets, both immovable and movable properties, were taken possession of by the creditors and were sold. These facts should be taken in mind and hence the order leaving damages is liable to be set aside.

(3.) The E.P.F.O's case is that the mill failed to pay the Provident Fund, Pension Fund, Employees Deposit Linked Insurance Fund Contribution and the administrative charges as prescribed with the due dates as per para 30 of the Employees' Provident Funds Scheme, 1952 for the period March 1997 to October 2016. Thus, it is liable to pay damages as per Sec. 14B of the P.F Act. A show cause notice was issued on 31/7/2018. The mill appeared before the authority for hearings. After providing the details as prayed for and conducting hearings on various dates, final orders were passed on 29/10/2018 levying damages of Rs.8,46,51,183.00 and after adjusting the already available sum of Rs.1,45,37,782.00, the balance of Rs.7,01,13,401.00 was ordered to be paid. The object of the provision is to impose exemplary, punitive damages to prevent employers from making defaults. The rates are prescribed under para 32A of the Scheme. For the delays exceeding six months upto 25/9/2018, the quantum was 37% and after the said date, it is 25%. Financial crunch and other difficulties are not reasons for waiving damages. The damages levied under the Act are unique. It is not a formality. The provisions of the Act are beneficial in nature. No mens rea is needed. The damages get attracted once there is a violation of the statutory obligation. The E.P.F.O is liable to pay interest to the employees as per the Scheme. Therefore, the appeal was without any merit.