BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 01/11/2010 CORAM THE HONOURABLE MRS.JUSTICE R.BANUMATHI AND THE HONOURABLE MR.JUSTICE S.NAGAMUTHU W.A.(MD).No.501 of 2008 and W.A.(MD).No.502 of 2008 and M.P.Nos.2 and 2 of 2008 The Regional Provident Fund Commissioner - II, Employees Provident Fund Organization, Regional Office, No.1, Lady Doak College Road, Chokkikulam, Madurai. ... Appellants in Both Writ Appeals Vs. Sree Visalam Chit Funds Ltd., New No.158, Old No.124, O.A.Street, Palathur, Sivagangai District, Through its Director, C.T.Natarajan ... Respondent in W.A.(MD).No.501 of 2008 The Tirunelveli Central Co-operative Bank Ltd., Vannarpettai, Tirunelveli, Through its Joint Registrar/Special Officer. ... Respondent in W.A.(MD).No.502 of 2008 PRAYER Writ Appeals are filed under Clause 15 of the Letters Patent against the Order dated 06.10.2007 made in W.P.(MD).Nos.3795 and 11142 of 2006 on the file of this Court. !For Appellant ... Mr.G.R.Swaminathan ^For Respondents ... Mr.K.Srinivasan Senior Counsel For Mr.G.Prabhu Rajadurai :COMMON JUDGMENT ***********************
S.NAGAMUTHU J.
Challenge in these Writ Appeals is to the order dated 06.10.2007 made in
W.P.(MD).Nos.3795 and 11142 of 2006. Since these two Writ Petitions were
disposed of by means of a Common Order, we heard both the Writ Appeals together,
and accordingly, the following Common Judgment is passed.
2. For the sake of convenience, let us, at first, take up the narration of
the facts involved in W.A.(MD).No.501 of 2008.
3. M/s.Sree Visalam Chit Fund Limited, Pallathur/Karaikudi, Sivagangai
District, is admittedly, an establishment covered under the Employees’ Provident
Fund and Miscellaneous Provisions Act, 1952, [hereinafter referred to as “the
Act”] and exempted under Section 17(1)(3) of the Act. The contributions in
respect of the employees employed under the respondent were governed by the
Family Pension Scheme, 1971, which was superseded by another scheme known as
“The Employees Pension Scheme, 1995” with effect from 16.11.1995. As per the new
scheme, the contribution of the employer as well as the employees was enhanced.
The same came to be challenged by as many as 444 employees of the establishment
by way of Writ Petition before the Principal Seat of this Court.
4. In the said Writ Petition, this Court granted an order of interim stay.
In view of the same, the respondent stopped remitting the contributions under
the new scheme, however, continued to remit contributions as per the Old Family
Pension Scheme 1971. While so, the Provident Fund Commissioner, by his letter
No.TN/17048/EO-Exem/SRO/MDU/96, informed the respondent to continue to pay the
contributions from 1611.1995 onwards, as per the Old Family Pension Scheme.
Immediately, the respondent started so paying the contributions, as per the Old
Family Pension Scheme. The said Writ Petition, however, by order dated
12.12.1996, came to be dismissed. Thereafter, the respondent complied with the
Employees’ Pension Scheme, 1995. In other words, the respondent started paying
enhanced contribution from January 1997 onwards.
5. While so, the Regional Provident Fund Commissioner issued a notice on
07.03.1997 under Section 7(A) of the Act directing the respondent to appear for
an enquiry for determining the contribution amount for the period between
February 1996 and December 1996, during which period, there was an order of
interim stay granted by this Court in the said Writ Petition filed by the
employees. The respondent appeared before the Regional Provident Fund
Commissioner and submitted his explanation stating that the respondent was not
liable to pay any amount for the said period. However, the Regional Provident
Fund Commissioner issued an order under Section 7(A) of the Act directing the
respondent to pay the contribution. Accordingly, the respondent paid the entire
contribution, as determined under Section 7(A) of the Act on 24.12.2004. Thus,
there has been no amount due from the respondent towards Provident Fund
Contribution to the Scheme.
6. While so, the Regional Provident Fund Commissioner issued a notice on
31.01.2006 calling upon the respondent to pay a sum of Rs.3,69,448/- towards
damages under Section 14(B) of the Act, for the belated remittance of the
contributions under the Employees’ Pension Scheme 1995. In response to the said
notice, the respondent appeared for an enquiry and submitted a written
objection, wherein, he contended that the belated payment was not wilful and it
was because of the interim stay granted by the High Court in the Writ Petition
filed by the employees challenging the new Pension Scheme that the respondent
could not pay the contributions.
7. It was further contended that though the respondent was ready to pay
the contribution, as per the Pension Scheme, the respondent was not permitted to
do so by the appellant. It was also contended that when the demand was made for
the interregnum period, the respondent filed a Writ Petition in W.P.No.2335 of
1996 before the Principal Seat of this Court and in the said Writ Petition,
again interim stay was granted. Thereafter, the said Writ Petition was dismissed
by the High Court. As against the same, a Writ appeal in W.A.No.23 of 2001 was
filed by the respondent herein. The said Writ Appeal was finally disposed of by
the High Court during December 2004, on an undertaking given by the employer to
remit the balance amount, that may be determined by the Provident Fund
Commissioner under Section 7(A) of the Act. It was in pursuance of the same, an
order was passed, and thereafter, the amount was paid without any delay. Thus,
it was contended by the respondent before the appellant that there was no
belated remittance at all, as according to the respondent, the remittance was
made as soon as the determination order was passed under Section 7(A) of the
Act, which was in pursuance of the order made in W.A.No.23 of 2001. However,
rejecting the above contentions of the respondent, the Regional Provident Fund
Commissioner, Madurai, by his proceedings No/TN/17048/RO/MDU/CIRCLE,
04/PDC/LD/2005, dated 03.04.2006, passed an order under Section 14(B) of the
Act, thereby directing the respondent to pay a sum of Rs.3,69,448/- as damages.
It was this order, which was challenged before the Writ Court.
8. Before the Writ Court, it was mainly contended by the respondent that
there was no belated remittance at all, as stated in the impugned order passed
by the appellant. It was also contended that the impugned order passed by the
appellant does not satisfy the legal requirements of Section 14(B) of the Act.
Therefore, according to the respondent, the impugned order passed by the
appellant is not sustainable under law.
9. On the other hand, it was contended before the Writ Court by the
appellant that there was belated payment, for which the respondent is liable to
pay damages under Section 14(B) of the Act. It was also contended that it was
only by following the procedure established under law, the impugned order came
to be passed.
10. Having considered the above contentions, the Writ Court accepted the
contentions of the respondent herein and allowed the said Writ Petition thereby
quashing the order of levy made under Section 14(B) of the Act. Aggrieved over
the same, the appellant is now before this Court with this Writ Appeal.
11. In this Writ Appeal, it is mainly contended by the appellant;
i). that the principles stated in Employees’ State Insurance Corporation
and others vs. Jardine Henderson Staff Association reported in AIR 2006 SCC
2777, upon which much reliance has been made by the Writ Court, has got no
application to the facts of the present case, because that was a case decided in
respect of an issue under the Employees’ State Insurance Act. According to the
appellant, under the Employees’ State Insurance Act, the employer, instead of
remitting the contribution, had spent the money for providing medical facility
to the employees, whereas in the case on hand, under the Employees Provident
Act, the money, which was due, was not spent by the employer for any purpose and
instead, he utilized the same for his own purpose, and therefore, though under
the Employees’ State Insurance Act, the employer is not liable to pay damages
under Section 85(B) of the Act, under the Employees Provident Funds and
Miscellaneous Provisions Act, the employer is liable to pay contribution towards
damages. To put it otherwise, the position of the employer under the Employees
State Insurance Act is totally different from the position of the employer under
the Employees Provident Funds and Miscellaneous Provisions Act, and therefore,
the Judgment rendered in the context of the Employees State Insurance Act cannot
be imported to the Employees Provident Funds and Miscellaneous Provisions Act.
ii.under the Employees State Insurance Act, because of the non-remittance
of the employers contribution, there is no loss caused to the employees, whereas
because of such non-remittance, such a loss has been caused to the employees,
who are the beneficiaries under the Employees Provident Funds and Miscellaneous
Provisions Act, and therefore, the standard of test to be applied to find as to
whether damages have to be levied under Section 85(B) of the Employees State
Insurance Act and the test to find as to whether damages have to be levied from
an employer under the Employees Provident Fund Act are different and they cannot
be equated to each other.
(iii).The impugned order is a speaking order, which has been passed on
considering all the relevant materials on record, and therefore, the same should
not have been interfered with by the Writ Court.
12. Per contra, it is contended by Mr.K.Srinivasan, learned Senior Counsel
appearing for the respondent that the non-remittance of the employers
contribution, in this case, would not amount to wilful conduct on the part of
the respondent. But, it was because of the interim stay granted by this Court in
the said Writ Petition filed by the employees. He would further submit that
though the respondent was ready to pay the employers contribution as per the
Pension Scheme of the year 1971, it was only the appellant, who declined to
receive the same. Therefore, the non-remittance of the employers contribution,
as per the Scheme of the year 1971 during the pendency of the said Writ Petition
was attributable only to the appellant.
13. On facts, as per the Judgment made in W.A.No.23 of 2001, a fresh
determination order under Section 7(A) of the Act was made only in the year 2004
and immediately thereafter, the amount was paid as determined under Section 7(A)
of the Act. Therefore, there is no belated payment for the period between
December 1996 and December 2004, as it is claimed by the appellant. Since there
was no belated payment, according to the respondent, question of levying damages
under Section 14(B) of the Act does not arise.
14. We have considered the above rival submissions and we have also
perused the records carefully.
15. Before going into the facts of the case, we deem it appropriate to
have a survey of various decisions of the Hon’ble Supreme Court to extract the
legal position regarding levy of damages under Section 14(B) of the Act. This
provision, which was introduced to the Parent Act by means of amendment by Act
37 of 1953, as it stood prior to 01.09.1991, reads as follows:-
14(B).Power to recover damages,- Where an employer makes default in the
payment of any contribution to the Fund 1[, the 2[pension] Fund or the Insurance
Fund] or in the transfer of accumulations required to be transferred by him
under sub-section (2) of Section 15 4[or sub-section (5) of section 17] or in
the payment of any charges payable under any other provision of this Act or of
5[any Scheme or Insurance Scheme] or under any of the conditions specified under
Section 17, 6[the Central Provident Fund Commissioner or such other officer as
may be authorized by the Central Government, by notification in the Official
Gazette, in this behalf] may recover [from the employer such damages, not
exceeding [***] the amount of arrears, as it may thinks fit to impose:]”
[Emphasis supplied].
16. The constitutionality of Section 14(B) of the Act came to be examined
by the Hon’ble Supreme Court in Organo Chemicals Industries vs. Union of India
reported in 1979 (4) SCC 573, wherein Section 14(B) of the Act was challenged on
two grounds. One of the grounds was that the said provision does not authorize
levy of any penal damages, i.e., a penalty or fine but deals with the power to
recover damages. It was further contended that it is not the power to impose a
penalty on the defaulting employer, though the maximum amount of damages that
can be recovered has been indicated in the Section. It was further submitted
that the damages must have some correlation with the loss suffered as a result
of delayed payments and the authority imposing damages must apply its mind to
this aspect of the matter. In other words, it was contended that unless it is
shown that the beneficiary has suffered a loss, question of levying damages does
not arise, since the damages contemplated under Section 14(B) of the Act cannot
be construed as a penalty. The Hon’ble Supreme Court, after elaborately
examining the said contention, ultimately, in Paragraph No.22, has held as
follows;-
22. The expression “damages” occurring in Section 14-B is, in substance, a
penalty imposed on the employer for the breach of the statutory obligation. The
object of imposition of penalty under Section 14-B is not merely “to provide
compensation for the employees”. We are clearly of the opinion that the
imposition of damages under Section 14-B serves both the purposes. It is meant
to penalise defaulting employer as also to provide reparation for the amount of
loss suffered by the employees. It is not only a warning to employers in general
not to commit a breach of the statutory requirements of Section 6, but at the
same time it is meant to provide compensation or redress to the beneficiaries
i.e. to recompense the employees for the loss sustained by them. There is
nothing in the section to show that the damages must bear relationship to the
loss which is caused to the beneficiaries under the Scheme. The word “damages”
in Section 14-B is related to the word “default”. The words used in Section 14-B
are “default in the payment of contribution” and, therefore, the word “default”
must be construed in the light of Para 38 of the Scheme which provides that the
payment of contribution has got to be made by the 15th of the following month
and, therefore, the word “default” in Section 14-B must mean “failure in
performance” or “failure to act”. At the same time, the imposition of damages
under Section 14-B is to provide reparation for the amount of loss suffered by
the employees.
17. A close reading of the above Judgment of the Hon’ble Supreme Court
would make it manifestly clear that what is levied under Section 14(B) of the
Act, as damages, is both by way of penalty as well as by way of recompense the
employees for the loss sustained by them on account of the default in the
payment of contribution by the employer. Here the expression “default” needs
emphasize.
18. After the above Judgment, the Parliament introduced amendment to
Section 14(B) by Act 33 of 1988, which came into force with effect from
01.09.1991. As per the said amendment, the doubt, if any, as to whether the
damages levied under Section 14(B) of the Act is also by way of penalty or not
stands obviated by the introduction of the expression “by way of penalty”. For
better understanding, it is worthwhile to extract the amended provision of
Section 14(B) of the Act, which reads as follows;-
14B. Power to recover damages – Where an employer makes default in the
payment of any contribution to the Fund the Pension Fund or the Insurance Fund
or in the transfer of accumulations required to be transferred by him under sub-
section 2 of section 15 or sub-section 5 of section 17 or in the payment of any
charges payable under any other provision of this Act or of any Scheme or
Insurance Scheme or under any of the conditions specified under section 17, the
Central Provident Fund Commissioner or such other officer as may be authorised
by the Central Government, by notification in the Official Gazette, in this
behalf may recover from the employer by way of penalty such damages, not
exceeding the amount of arrears, as may be specified in the Scheme. [Emphasis
supplied].
19. From the above discussion, it could be safely understood that the
purpose of levying damages under Section 14(B) of the Act serves a dual purpose,
viz., to penalize the employer for his default committed and also to compensate
the employee.
20. The expressions “default” and “failure” are synonymous terms. Failure,
in the dictionary sense means, “a falling short”, “deficiency” or “lack”.
Default means “omission of that which ought to be done”. From this, it could be
understood that “failure” to constitute “default” must go with some animus to
commit such failure. A failure simplicitor without such an animus would not
constitute a default in the sense of the expression, in which it has been used
in Section 14(B) of the Act.
21. At this juncture, we may usefully refer to a Judgment of the Hon’ble
Supreme Court in Hindustan Times Ltd., vs. Union of India reported in 1998 (2)
SCC 242, wherein while examining the scope of 14(B) of the Act, the Hon’ble
Supreme Court has held as follows;-
The authority under Section 14-B has to apply his mind to the facts of the
case and the reply to the show-cause notice and pass a reasoned order after
following principles of natural justice and giving a reasonable opportunity of
being heard; the Regional Provident Fund Commissioner usually takes into
consideration the number of defaults, the period of delay, the frequency of
default and the amounts involved; default on the part of the employer based on
plea of power-cut, financial problems relating to other indebtedness or the
delay in realisation of amounts paid by the cheques or drafts, cannot be
justifiable grounds for the employer to escape liability; there is no period of
limitation prescribed by the legislature for initiating action for recovery of
damages under Section 14-B.
22. Later on, when a similar question arose while examining the scope of
Section 85(B) of the ESI Act, which is in pari materia to Section 14(B) of the
EPF Act, the Hon’ble Supreme Court in ESI Corporation vs HMT Limited reported in
2008 (3) SCC 35, in paragraph No.21, has held as follows;-
A penal provision should be construed strictly. Only because a provision
has been made for levy of penalty, the same by itself would not lead to the
conclusion that penalty must be levied in all situations. Such an intention on
the part of the legislature is not decipherable from Section 85-B of the Act.
When a discretionary jurisdiction has been conferred on a statutory authority to
levy penal damages by reason of an enabling provision, the same cannot be
construed as imperative. Even otherwise, an endeavour should be made to construe
such penal provisions as discretionary, unless the statute is held to be
mandatory in character.
In Prestolite (India) Ltd., v. Regional Director & Anr reported in 1994 Supp (3)
SCC 690, the Hon’ble Supreme Court has held as follows;-
Even if the regulations have prescribed general guidelines and the upper
limits at which the imposition of damages can be made, it cannot be contended
that in no case, the mitigating circumstances can be taken into consideration by
the adjudicating authority in finally deciding the matter and it is bound to act
mechanically in applying the uppermost limit of the table. In the instant case,
it appears to us that the order has been passed without indicating any reason
whatsoever as to why grounds for delayed payment were not to be accepted. There
is no indication as to why the imposition of damages at the rate specified in
the order was required to be made. Simply because the appellant did not appear
in person and produce materials to support the objections, the employee’s case
could not be discarded in limine. On the contrary, the objection ought to have
been considered on merits. We, therefore, allow this appeal and set aside the
impugned orders. The Regional Director is directed to dispose of the
representation of the appellant by indicating reasons after taking into
consideration the grounds for delayed payment. Since the matter is going to be
reheard, the appellant is permitted to make personal representation at the
hearing of the show-cause proceeding.”
In Dilip N.Shroff v. Joint Commissioner of Income Tax, Mumbai & Anr reported in
2007 (6) SCC 329, the Hon’ble Supreme Court has held as follows;-
Thus, it appears that there is distinct line of authorities which clearly
lays down that in considering a question of penalty, mens rea is not a relevant
consideration. Even assuming that when the statute says that one is liable for
penalty if one furnishes inaccurate particulars, it may or may not by itself be
held to be enough if the particulars furnished are found to be inaccurate is
anything more needed but the question would still be as to whether reliance
placed on some valuation of an approved valuer and, therefore, the furnishing of
inaccurate particulars was not deliberate, meaning thereby that an element of
mens rea is needed before penalty can be imposed, would have received serious
consideration in the light of a large number of decisions of this Court.
23. After having taken note of the above Judgments in Prestolite (India)
Ltd., and Dilip N.Shroff v’s case, the Hon’ble Supreme Court in Emp. State
Insurance Corpn vs. HMT Ltd., reported in 2008 (1) Scale 341, has agreed with
the view in Dilip N.Shroff v’s case to hold that an element of mens rea is
required before penalty can be imposed. While agreeing with the said view, the
Hon’ble Supreme Court has given additional reasons also, which could be found in
Paragraph Nos.20 and 21 of the said Judgment, which read as follows;-
20. We agree with the said view as also for the additional reason that the
subordinate legislation cannot override the principal legislative provisions.
The statue itself does not say that a penalty has to be levied only in the
manner prescribed. It is also not a case where the authority is left with no
discretion. The legislation does not provide that adjudication for the purpose
of levy of penalty proceeding would be a mere formality or imposition of penalty
as also computation of the quantum thereof became a foregone conclusion.
Ordinarily, even such a provision would not be held to providing for mandatory
imposition of penalty, if the proceeding is an adjudicator one or compliance of
the principles of natural justice is necessary thereunder.
21. Existence of mens rea or actus reus to contravene a statutory
provision must also be held to be a necessary ingredient for levy of damages
and/or the quantum thereof.
24. A close reading of the above Judgment would make it undoubtedly clear
that since what is imposed under Section 14(B) of the Act is not only with a
view to compensate the employee, but also by way of penalty, it is absolutely
necessary that it should be proved that there was a mens rea or actus reus to
contravene the statutory provision by the employer.
25. The learned counsel for the appellant would try to distinguish the
said Judgment by contending that though Section 14(B) of the EPF Act and Section
85(B) of the ESI Act are in pari materia, they operate in different spheres and
the consequences of the failure to pay contribution under both the enactments
are altogether different. He would point out that insofar as the ESI Act is
concerned, if the contribution is not paid in time, there is no loss caused to
the employee, because he gets medical aid from the employer himself, whereas
under the EPF Act, the money, which is due to the scheme under the Act, is
utilized by the employer for a different purpose.
26. Though the said argument appears to be attractive, we find no
substance in the same. A close comparison of both the provisions under the
enactments would go to show that they are, in all respects, in pari materia.
Insofar as Section 85(B) of the ESI Act is concerned, the damages is levied by
way of penalty and the expression “by way of penalty” was found even in the
provision, as it was introduced to the Parent Act. But, the said expression “by
way of penalty” was not there, when Section 14(B) of the EPF Act was introduced
to the Parent Act. Since attempts were made to distinguish these provisions and
since arguments were advanced that Section 14(B) of the Act does not constitute
penalty to obviate the same and in view of the Judgment of the Hon’ble Supreme
Court in Emp. State Insurance Corpn vs. HMT Ltd., the expression “by way of
penalty” was incorporated by means of amendment. After the Judgment of the
Hon’ble Supreme Court and after the said amendment, now, there can be no doubt
that there is no distinction in any sense between Section 14(B) of the EPF Act
and Section 85(B) of the ESI Act. Therefore, the law laid down by the Hon’ble
Supreme Court in Emp. State Insurance Corpn vs. HMT Ltd., cited supra, squarely
applies to Section 14(B) of the EPF Act also.
27. Now, let us consider the facts of the case to examine as to whether
there was any mens rea or actus reus on the part of the respondent to commit
default in payment of the contribution. At the outset, we may say that we do not
find any material to hold that there was such mens rea or actus reus. It is the
admitted case that under the Pension Scheme of the year 1971, the respondent was
paying the contribution without any default. When the new Scheme was introduced
and the rate of contribution was enhanced, it was not as though the respondent
was not prepared to pay the employer’s contribution. However, it was only the
employees, who rushed to the Court, challenging the new scheme and got an order
of interim stay in the Writ Petition filed by them. It was a blanket stay order
in respect of the employees contribution’ as well as the employers’
contribution. That was the reason why, the respondent was not in a position to
remit the contribution in accordance with the new scheme.
28. It is also seen that the respondent continued to pay the same in the
rate prescribed under the Old Scheme. Thereafter, the matter was clarified by
the Writ Court that the employer should remit the contribution as per the Old
Scheme. Accordingly, the respondent further continued to pay the same. After the
said Writ Petition was dismissed, the respondent, without any default, as we
have already narrated above, paid the contribution as per the New Scheme. When a
further demand was made, it could be seen that the respondent challenged the
same by way of a Writ Petition in W.P.No.2335 of 1996 and after the said Writ
Petition was dismissed, challenging the same, W.A.No.23 of 2001 was filed by the
respondent. In the Writ Appeal, by Judgment dated 04.11.2004, the Division Bench
of this Court directed the Regional Provident Fund Commissioner to decide the
quantum and liability under Section 7(A) of the Act and then to make the demand.
Thereafter, such an order was passed and immediately, the respondent paid the
amount. Thus, absolutely there is nothing to suggest that the respondent had
either mens rea or actus reus to breach the provision regarding payment of
contribution. As it has been contended by the learned Senior Counsel for the
respondent, such failure to pay the contribution during the interregnum period
was solely attributable to the litigations before the Court and the
consequential interim order of stay granted by this Court.
29. The learned counsel for the appellant would submit that when the
interim stay order stood vacated on the dismissal of the Writ Petition, the
parties should get relegated to their original position. In order to highlight
the said proposition, the learned counsel has relied on few Judgments of the
Hon’ble Supreme Court. Since it is a well settled law, we do not propose to
refer to those Judgments. Here, in this case, the benefit arising out of the
stay order granted by this Court was limited only to pay the contribution as per
the Old Scheme and not under the new scheme. After the stay order was vacated,
the parties have been relegated to their original position and accordingly, the
respondent has paid the entire arrears as per the new scheme. But, applying the
said principle, it cannot be said that because the respondent did not pay the
enhanced contribution during the pendency of the Writ Petition and during the
stay order, it could be held that the respondent is liable to pay the damages.
30. In our considered opinion, as we have already concluded, unless it is
established that such failure to pay the contribution was attributable to the
mens rea or actus reus on the part of the employer, question of levying damages
under Section 14(B) of the Act does not arise. It has been repeatedly held by
the Hon’ble Supreme Court that simply because the statutory provision enables an
authority to impose penalty, it does not mean that such penalty should be
imposed in a mechanical manner without looking into the attending circumstances
and the facts as to whether there was any mens rea or actus reus on the part of
the employer.
31. Now, coming to the question of compensation by way of damages, the
contention of the learned counsel is that the contribution payable by the
respondent to the fund has been utilized by the employer, whereas under the ESI
Act, the amount is utilized for giving medical aid to the employees, and
therefore, both the provisions are not in pari materia cannot be countenanced.
As we have already noticed, the purpose of levying damages is to compensate the
employees only for default of the employer. But, in this case, the employer
could not pay the enhanced amount of contribution as per the Pension Scheme of
the year 1995, because of the act of the employees in approaching the High Court
and getting the order of interim stay. Thus, the loss, if any, sustained by the
employees, is attributable to their own act and so, they are not entitled for
damages.
32. Under the ESI Act, if the amount is not paid by the employer to the
ESI Corporation, and instead he himself provides medical assistance to the
employees, there is no need to pay such arrears of contribution to the ESI
Corporation, because ESI Corporation has not rendered any medical service to the
employees. But, in the case of the EPF contribution, since the amount is not
spent by the employer for the benefit of the employees, the amount is required
to be remitted to the EPF organization. But, under both the enactments, levying
of damages is based on the mens rea or actus reus. Therefore, we do not find any
distinction between these two provisions in their application in respect of
levying damages by way of penalty. On facts, since we have already concluded
that the payment of the contribution made belatedly by the respondent is not on
account of any mens rea or actus reus, we hold that levying of damages by the
appellant is not sustainable, and therefore, the Writ Court was right in
interfering with the same. Thus, we do not find any merit in the Writ Appeal,
and therefore, W.A(MD).No.501 of 2008 is dismissed. No costs. Consequently,
connected Miscellaneous Petition is closed.
W.A.(MD)No.502 of 2003;-
33. In this case also, the non-payment of the contribution as per the
Employees Pension Scheme of the year 1995 was on account of the interim stay
granted in W.P.M.P.No.3952 of 1996, which came to be vacated on 12.12.1996.
Thereafter, the impugned order passed by the appellant does not anywhere show
that there was any default in the sense, in which it has been used in Section
14(B) of the Act. A close scrutiny of the order of the appellant impugned in the
Writ Petition would go to show that there is no finding at all that the belated
payment of the contribution was on account of any mens rea or actus reus on the
part of the respondent. Thus, the learned Single Judge was right in interfering
with the impugned order. In view of the above, we do not find any merit in this
Writ Appeal warranting interference at the hands of this Court.
In the result, W.A.(MD)No.502 of 2003 fails and the same is, accordingly,
dismissed. No costs. Consequently, connected Miscellaneous Petition is closed.
NB
To
The Regional Provident Fund Commissioner – II,
Employees Provident Fund Organization,
Regional Office,
No.1, Lady Doak College Road,
Chokkikulam, Madurai.