Employee's Provident Fund Appellate Tribunal Has Power To Reduce Or Waive Damages Imposed On The Employer: Madras High Court

Background Facts

On order under Section 14B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act) for recovery of damages was passed against M/s Fenner (India) Ltd. (Respondent). An appeal was filed by the Respondent before the Employee's Provident Fund Appellate Tribunal (Appellate Tribunal). The Appellate Tribunal restricted the damages to 15% per annum. A writ petition was filed by Regional Provident Fund Commissioner, EPFO (Appellant) against the order of the Appellate Tribunal, but the writ petition was dismissed and the order of the Appellate Tribunal was upheld. Thus the Writ Appeal was filed.

It was contended by the Appellant that Appellate Tribunal had no power to revise the damages imposed by the Original Authority under Section 14B of EPF Act read with Paragraph No. 32A and 32B of Employees' Provident Fund Scheme 1952 (EPF Scheme). As per Paragraph No. 32A of EPF Scheme, damages have to be levied at the rates furnished therein and there is no discretion provided to the officials under the EPF Act.

It was further contended by the Appellant that a gross reduction in the levied damages would have an adverse impact on the whole EPF Scheme. Also the question of mens rea would not arise in the case of imposition of damages under Section 14B of the EPF Act in view of the fact that it is not a criminal liability, but only a civil liability. Thus financial difficulty of the Respondent cannot be a reason to reduce the damages.

Findings of the Court

The court observed that the contention of the Appellant was that power to reduce or waive the damages levied under Section 14B of the EPF Act was solely within the exclusive domain of the Central Board constituted under Section 5A of the EPF Act. The Appellant further contended that the Provident Fund Commissioner or the Appellate Tribunal formed under Section 11I of the EPF Act did not have any power to reduce or waive the damages.

The court observed that as per section 14B of the EPF Act, the Provident Fund Commissioner or any other officer authorized by the Central Government may recover such damages which do not exceed the amount of arrears which may be specified in the scheme contemplated under Paragraph No. 32A of the EPF Scheme.

The court held that as per Section 7I and 14B of the EPF Act, order passed by the Central Board under Section 14B are also appealable to the Appellate Tribunal. Thus when the orders of Central Board are appealable to the Appellate Tribunal, it is not legally acceptable to say that the Central Board has exclusive power to reduce/waive damages but the Appellate Tribunal does not have such powers.

The court further remarked under section 7L of the EPF Act, the Appellate Tribunal has power to confirm, modify or to annul the orders of the original authority. Thus it cannot be contended by the original authority that their orders cannot be modified or set aside by the Appellate Tribunal.

The court also observed that when Section 7Q is read with Section 14B, it emerges that imposition of interest on belated payment of contribution amount is automatic for the same, it is not necessary to provide any opportunity of being heard to the employer. However, it is mandatory to provide hearing before imposition of damages. Thus it is clear that some kind of discretion is vested in authorities to consider the mitigating circumstances before imposing the damages. If there was no discretion, then the Legislature would not have mandated granting of opportunity to the employer before imposing damages.

The court thus observed that:

we are of the considered opinion that the Appellate Tribunal which is an Appellate Authority not only for the authorized officer under the Act, but also for the Central Board, is empowered to reduce or waive damages as per the scheme.

With the aforesaid observations, the court dismissed the writ petition and upheld the order of the Tribunal

Case No.- W.A(MD).No.298 of 2024

Case Name- Regional Provident Fund Commissioner, EPFO vs President Officer, Employee's Provident Fund Appellate Tribunal & Ors

Citation: 2024 LiveLaw (Mad) 188

Counsel for the Petitioner- Mr.K.Muralisankar

Counsel for Respondents- nil

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