TaxTMI 
TaxTMI 
2026 (9) TMI 1220
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....R, Mr. Pramod Kumar Goel, Adv., Ms. Akansha Bharti, Adv., Mr. M.A. Shaji, Adv., Ms. Anchal Sharma, Adv., Ms. K.J. Karthika, Adv., Mr. Shantanu Pandit, Adv., Mr. Robin George, Adv., Mr. R S Sharma, Adv., Mr. Vivek Bansal, Adv., Mr. Deepak Sharma, Adv., Mr. Ajay K Tyagi, Adv., Mr. Abhishek Sharma, AOR, Ms. Shruti Jose, AOR, M/S. Mukesh Kumar Singh And Co., AOR, Mr. Mukesh Kumar Singh, Adv., Mr. Rahul Saini, Adv., Mr. Vikash Kumar, Adv., Mr. Pushkar Singh Mall, Adv., Mr. Jeetendra Kumar, Adv., Ms. Kajal Rani, Adv., Ms. Komal Singh, Adv., Mr. Abhay Jadaun, Adv., Mr. Harsh Chaturvedi, Adv., Mr. Pawan Kumar Dhiman, Adv., Mr. Abdulla Naseeh V.T., AOR, Mr. Musthafa Atheeq, Adv., Ms. Rachel Sara James, Adv., Mr. Ritin Rai, Sr. Adv., Mr. P. S. Sudheer, AOR, Mr. Rishi Maheshwari, Adv., Ms. Anne Mathew, Adv., Mr. Bharat Sood, Adv., Mr. Jashan Vir Singh, Adv., Ms. Ritika Sinha, Adv. R. No. 2 Mr.P V Dinesh, Sr. Adv., Mr. P V Vinod, Adv., Ms. Reetha D., Adv., Ms. Anna Oommen, Adv., Mr. Saketh Maddipoti, Adv., Ms. Shruti Jose, AOR. ORDER The appeals call in question the impugned orders, passed at the instance of the Central Board of Trustees (under the Employees' Provident Funds and Misce....
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....into insignificance, as held in Central Bank of India(2009) 4 SCC 94. There being a clear first charge created under the EPF&MP Act, it overrides the priority under Section 35 and Section 13 as also that conferred under Section 26-E since a priority cannot be equated with a first charge and cannot be given prevalence over the first charge statutorily created.' 4. Jet Aircraft Maintenance Engineers Welfare Association3 held that provident fund has to be paid to workmen and employees in full and that cannot be made subject of distribution under the waterfall mechanism of Section 53(1) of the IB Code. It was concluded that the workmen and employees are entitled to payment of full amount of the provident fund and gratuity till the date of the commencement of insolvency, since they are not part of the liquidation estate under Section 36(4)(b)(iii). It was categorically indicated that the claim admitted by the Resolution Professional includes the payment of provident fund, gratuity and leave encashment also. The above view has been approved by this Court by rejection of Civil Appeal No. 407 of 2023, Jalan Fritsch Consortium v. Regional Provident Fund Commissioner and Civil Appeal Nos.....
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....ated thereunder. Though, a statutory amendment has not been brought correspondingly in the EPF & MP Act, we are of the opinion that the Central Board could consider the application of waiver or reduction, which the SRA could make before it, considering the fact that the resolution plan sought to be implemented, is akin to a plan of rehabilitation as sanctioned by the BIFR under the SICA. One of the impugned orders specifically provides for that remedy before the Central Board. 7. Be that as it may, we cannot but notice that Section 14B was held to be mandatory in Horticulture Experiment Station Gonikoppal, Coorg v. Regional Provident Fund Organization (2022) 4 SCC 516. It was held that the imposition of damage for delayed payment is automatic since it is a breach of civil obligations/liabilities committed by an employer and there is no further requirement to examine the existence of an element of actus reus or mens rea, or to examine the issue of justification for imposing damages. Though, we fully agree with the Co-ordinate Bench that there is no reason to find actus reus or mens rea, we are of the opinion, with abiding respect to the Co-ordinate Bench, that Section 14B even af....
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....14B, takes it both the interest component accrued in favour of the employee by reason of default, as also the aspect of deterrent penalty. However, it was held that disputes between partner's, power-cut and other financial problems would not enable a discretion to be exercised in favour of the employer. 10. After amendment, by Act 33 of 1988, the provision reads as under: '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 recove....
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....ection (2) of section 15 or sub-section (5) of Section 17 of the Act or in the payment of any charges payable under any other provisions of the Act or Scheme or under any of the conditions specified under Section 17 of the Act, the Central Provident Fund Commissioner or such 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, damages at the rates given below: Period of Default Rates of damages (0% of arrears per annum) (a) Less than two months 17 (b) Two months and above but less than four months 22 (c) Four months and above but less than six months 27 (d) Six months and above 37' 14. Here, we have to pertinently observe that the words employed under the amended Section 14B, is to the effect that the Commissioner or the Authorized Officer, 'may recover' by way of penalty such damages. Hence, the discretion is still left with the authority to decide as to whether there should be an imposition of penalty at all. If the Authorized Officer is satisfied that the imposition of penalty has to be made in the facts and circumstances, then the levy sha....