TaxTMI 
TaxTMI 
2014 (7) TMI 1382
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....ecided on 24.06.2005. The Special Bench was constituted in view of a reference submitted by a Single Judge in Writ Petition No. 16037(W), who had entertained an opinion which differed with three earlier decisions rendered by Single Judges in three separate matters. Along with the aforestated writ petition, an appeal pending before a Division Bench against one of those Single Judge decisions was also taken up by the Special Bench. In this Appeal, therefore, we have primarily to consider whether the exposition of law by the Special Bench in Dalgaon Agro Industries Ltd. is the logical and acceptable view. 3. The factual matrix obtaining in the case at hand, succinctly stated, is that M/s. Mathura Tea Estate, P.O. Mathura Bagan, District Jalpaiguri, West Bengal, owned by Saroda Tea Company Ltd., indubitably an establishment covered by the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 ('the EPF Act' for brevity), had defaulted in remitting the contributions and accumulations payable under the EPF Act and the sundry Schemes formulated under that statute. It was in those circumstances that the Regional Provident Fund Commissioner ('RPF Commissioner&#....
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.... at the rate of 12 per cent per annum on the damages. It was this Order of the RPF Commissioner that failed to find favour with the learned Single Judge of the High Court at Calcutta, who set aside the Commissioner's Orders and directed the said Authority to reconsider the issues within a period of three months. The learned Single Judge had drawn reliance from the ruling reported as The Regional Provident Fund Commissioner, Mangalore v. Karnataka Forest Plantations Corporation Ltd., Bangalore 2000 (1) LLJ 1134, which had ruled that on an interpretation of Section 17B the transferee employer would be liable to pay all outstanding contributions even for the period preceding the transfer, but it could not be fastened with punitive liability for acts of omission or commission of the previous employer for the period anterior to the transfer. It will bear reiteration that in terms of the judgment of the Division Bench impugned before us, the decision of the learned Single Judge in its own turn was reversed on the application of the dictum of the Special Three-Judge Bench in Dalgaon Agro Industries Ltd. 4. The Special Bench of the High Court of Calcutta in Dalgaon Agro Industries L....
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....tral Government may, after giving not less than two months' notice of its intention so to do, by notification in the Official Gazette, apply the provisions of this Act to any establishment employing such number of persons less than twenty as may be specified in the notification. Section 2(e) "employer" means - (i) in relation to an establishment which is a factory, the owner or occupier of the factory, including the agent of such owner or occupier, the legal representative of a deceased owner or occupier and, where a person has been named as a manager of the factory Under Clause (f) of Sub-section (1) of Section 7 of the Factories Act, 1948 (63 of 1948), the person so named; and (ii) in relation to any other establishment, the person who, or the authority which, has the ultimate control over the affairs of the establishment, and where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent; Section 7A. Determination of moneys due from employers. - (1) The Central Provident Fund Commissioner, any Additional Central Provident Fund Commissioner, any Deputy Provident Fund....
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.... and shall, notwithstanding anything contained in any other law for the time being force, be paid in priority to all other debts. Section 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. Provided that before levying and recovering such damages, the employer shall be given a reasonable opportunity of being heard. Provided further that the Central Board may reduce or waive the damages levied under this section in relation to an establishment which is a sick ....
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....he most efficacious and convenient manner. This decision, Sayaji Mills Ltd., was not brought to the notice of the Division Bench of the Karnataka High Court in Karnataka Forest Plantations Corporation Limited, otherwise it would not have endeavoured to explore which party/employer was 'guilty' of the infraction of the statutory provisions. The reasoning of the Karnataka decision is evidently flawed and runs counter to the intendment of the EPF Act as is crystal clear from a perusal of its Preamble (supra); and manifests the ingenuity that employers may devise to circumvent liability. 7. Mr. Jayant Bhushan, learned Senior Counsel for the Appellant has sought sustainment for his submissions from Employees' State Insurance Corporation v. HMT Ltd. (2008) 3 SCC 35, but in our consideration, in vain. In that case, the ESIC raised a claim for deposit of interest on outstanding contributions of the management under the ESIC Act and the concerned Regulations, and in addition thereto levied damages in terms of Section 85B of the Employees' State Insurance Act, 1948 ('ESIC Act' for brevity). Section 85B of the ESIC Act is essentially para materia Section 14B of the ....
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....tated upon. This decision does not prescribe that damages or penalties cannot or ought not to be imposed. Further, the presence or absence of mens rea and/or actus reus would be a determinative factor in imposing damages Under Section 14B, as also the quantum thereof since it is not inflexible that 100 per cent of the arrears has to be imposed in all the cases. Alternatively stated, if damages have been imposed Under Section 14B it will be only logical that mens rea and/or actus reus was prevailing at the relevant time. We may also note that this Court had yet again reiterated the well-known but oft ignored principle that High Courts or any Appellate Authority created by a statute should not substitute their perspective of discretion on that of the lower Adjudicatory Authority if the impugned Order does not otherwise manifest perversity in the process of decision taking. HMT Ltd. does not proscribe imposition of damages; that would negate the intent of the legislature. The submission of the Petitioner before us is that the liability was of the erstwhile management and since the Petitioner was not the "employer" at the relevant time, default much less deliberate and wilful default o....
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....nd cannot be transferred by any compact between persons or even by statute. But this incontrovertible legal principle does not support or validate the contention of Mr. Jayant Bhushan, learned Senior Advocate for the Appellants, that damages levied in terms of Section 14B of the EPF Act cannot be foisted onto his clients. Sections 14, 14A, 14AA, 14AB and 14AC of the EPF Act are the provisions postulating prosecution; in contradistinction Section 14B contemplates the power to "recover from the employer by way of penalty such damages, not exceeding the amount of arrears, as may be specified in the Scheme". It is true that it is not a river but a mere rivulet that segregates and distinguishes the legal concepts of damages or compensatory damages or exemplary damages or deterrent damages or punitive damages or retributory damages. We shall abjure from writing a dissertation on this compelling legal nodus; save to clarify that modern jurisprudence recognizes that the imposition of punitive damages, quintessentially quasi-criminal in character, can be resorted to even in civil proceedings to deter wilful wrongdoing by making an admonished example of the wrongdoer. This is the essential p....