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Judgment
S. Nagamuthu, J.—In this writ petition, the following important question of law has arisen for consideration.
For making an appeal to the Employees Provident Fund Appellate Tribunal u/s 7I of the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952, against an order of recovery of damages passed u/s 14B of the said Act, whether the employer needs to pay 75% of the amount due from him as envisaged in Section 7O of the Act?
The petitioner is admittedly an employer as defined under the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952 ("EPF Act" in short). The second respondent, by his Proceedings in TN/RO/MDU/24116/Circle 6/PDC/LD/2013 dated 31.05.2013, has passed an order to recover damages from the petitioner to the tune of Rs. 23,77,612/-. Challenging the said order made u/s 14B of the EPF Act, the petitioner has preferred an appeal to the Employees Provident Fund Appellate Tribunal in A.T.A. 500(13)/2013. The Tribunal, by order dated 30.07.2013, directed the petitioner to deposit an amount of Rs. 10,00,000/- representing 75% of the amount due, within four weeks from the date of the said order. Challenging the said direction, the petitioner is before this Court with this writ petition.
I have heard the learned counsel appearing on either side and also perused the records carefully.
It is the contention of the petitioner that so far as Section 7O of the EPF Act is concerned, it is applicable only against an order made u/s 7A of the EPF Act. In respect of an order for recovery of damages made u/s 14B of the EPF Act, according to the petitioner, Section 7O is not applicable. But the learned counsel for the respondents would submit that Section 7O is very much applicable to an order made u/s 14B of the EPF Act as well.
I have considered the above submissions. In order to examine the question of law involved, let us have a quick look into the relevant provisions of the EPF Act. Section 7A(1) of the EPF Act reads as follows (Sub-Sections 2 to 5 are not reproduced herein as it is not necessary for the purpose of this case):
7-A. Determination of moneys due from employers.-(1) The Central Provident Fund Commissioner, any Additional Provident Fund Commissioner, any Deputy Provident Fund Commissioner, any Regional Provident Fund Commissioner or any Assistant Provident Fund Commissioner, may by order,-
(a) in a case where a dispute arises regarding the applicability of this Act to an establishment, decide such dispute; and
(b) determine the amount due from any employer under any provision of this Act, the Scheme or the Pension Scheme or the Insurance Scheme, as the case may be, and for any of the aforesaid purposes may conduct such inquiry as he may deem necessary.
Section 14B of the EPF Act reads as follows:
14-B. 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 subsection (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 u/s 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 industrial company and in respect of which a Scheme for rehabilitation has been sanctioned by the Board for Industrial and Financial Reconstruction established u/s 4 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986), subject to such terms and conditions as may be specified in the Scheme.
As against the order made u/s 7A as well as an order made u/s 14B of the EPF Act, an appeal lies to the Tribunal u/s 7I of the EPF Act. Section 7I of the EPF Act reads as follows:
7-I. Appeals to Tribunal.-(1) Any person aggrieved by a notification issued by the Central Government, or an order passed by the Central Government or any authority, under the proviso to sub-section (3), or sub-section (4), of section 1, or section 3, or sub-section (1) of section 7A, or section 7B (except an order rejecting an application for review referred to in sub-section (5) thereof), or section 7C, or section 14B, may prefer an appeal to a Tribunal against such notification or order.
(2) Every appeal under sub-section (1) shall be filed in such form and manner, within such time and be accompanied by such fees, as may be prescribed.
Now comes the crucial provision, viz. Section 7O of the EPF Act, which reads as follows:
7-O. Deposit of amount due, on filing appeal.-No appeal by the employer shall be entertained by a Tribunal unless he has deposited with it seventy-five per cent of the amount due from him as determined by an officer referred to in section 7A:
Provided that the Tribunal may, for reasons to be recorded in writing, waive or reduce the amount to be deposited under this section.
It is the contention of the learned counsel for the petitioner, had it been the intention of the Parliament to bring within the ambit of Section 7O of the EPF Act an order u/s 14B of the EPF Act also, the Parliament would have made specific reference to Section 14B in Section 7O as it has done with reference to Section 7A of the EPF Act. It is his further contention that the Parliament has consciously omitted to include Section 14B of the EPF Act within the ambit of Section 7O of the EPF Act. The learned counsel for the petitioner would further submit that a similar question arose before the Bombay High Court in Writer Safeguard Private Limited Vs. Regional Provident Fund Commissioner-II and Assessing Officer and Others, . In the said case, according to the learned counsel for the petitioner, the Bombay High Court has held that Section 7O of the EPF Act is not applicable to an order made u/s 14B of the EPF Act.
The learned counsel for the petitioner would further submit that a Division Bench of this Court in The Regional Provident Fund Commissioner - II Employees'' Provident Fund Organisation and The Recovery Officer and Assistant Provident Fund Commissioner Employees'' Provident Fund Organisation Vs. Shirine Velankanni Senior Secondary School, , while dealing with a different aspect of the matter, has held that proceedings contemplated u/s 7A is a primary proceeding for determining the contribution from the employer, but proceeding u/s 14B is entirely different. The Division Bench has further held that the authorities empowered to take action to recover damages from the u/s 14B, are different from the authorities constituted for the purpose of determining the dues u/s 7A of the Act.
Referring to the above observations made in the said judgment of the Division Bench, the learned counsel for the petitioner would submit that an order made u/s 7A cannot be equated to an order made u/s 14B of the EPF Act. Therefore, according to the learned counsel for the petitioner, the Parliament has omitted to include Section 14B within the ambit of Section 7O of the EPF Act, since the order made u/s 14B is totally different from an order made u/s 7A of the EPF Act. Thus, according to the learned counsel for the petitioner, the direction issued by the Tribunal in the instant case, to the petitioner, directing him to deposit 75% of the amount due as per Section 7O of the EPF Act, is not at all sustainable.
But the learned counsel for the respondents would vehemently dispute the above stand taken by the petitioner. According to him, Section 7O of the EPF Act speaks of the amount due from the employer as determined by an officer referred to in Section 7A of the EPF Act. Here, in this case, according to the learned counsel, the officer who has issued the order for recovery of damages u/s 14B of the EPF Act, is the officer referred to in Section 7A of the EPF Act. Therefore, according to the learned counsel for the respondents, Section 7O is applicable to an order for recovery of damages passed by such officer. Thus, according to the learned counsel for the respondents, Section 7O of the EPF Act is applicable to an order of recovery made u/s 14B of the EPF Act.
I have considered the above submissions.
A close reading of Section 7O of the EPF Act would make it abundantly clear that Section 14B has not been brought within the ambit of Section 7O of the EPF Act. Going by a plain reading of the said provision, one can easily perceive that the Parliament did not intend to bring Section 14B within the purview of Section 7O. Had it been really the intention of the Parliament to bring an order made u/s 14B of the EPF Act also within the purview of Section 7O, the Parliament would have certainly, in unequivocal terms, stated so in Section 7O of the EPF Act. While the Parliament has specifically mentioned Section 7A in Section 7O, it has omitted to mention Section 14B in Section 7O, which in my considered view, is a conscious omission. This clearly goes to indicate the intention of the Parliament.
Nextly, the language used in Section 7O of the EPF Act plays a vital role in the matter of understanding of Section 7O of the EPF Act, for the purpose of interpretation. The language used is "amount due from him (employer) as determined by an officer referred to in section 7A". The expression "determined" will go to indicate that the amount due which has been determined by the competent authority, is brought within Section 7O. If one read Section 7A(1) of the EPF Act, it will show that the money due from the employer is determined under the said provision. Simultaneously, if one looks into Section 14B of the EPF Act, it will show that there is no determination of the amount due from the employer at all. Secondly, in Section 7O, an officer referred to in Section 7A should have determined the amount. Section 7A specifically mentions the officers, viz. Central Provident Fund Commissioner, Additional Provident Fund Commissioner, Deputy Provident Fund Commissioner, Regional Provident Fund Commissioner and Assistant Provident Fund Commissioner. These are all officers referred to in Section 7A of the EPF Act. If any one of these officers has determined the amount, then, for making an appeal against the said determined amount, Section 7O is to be complied with.
A cursory look into Section 14B of the EPF Act would go to show that the officers who are empowered to recover damages are 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. Even the officers referred to in Section 14B of the EPF Act are not one and the same. This is what the Division Bench of this Court in The Regional Provident Fund Commissioner - II Employees'' Provident Fund Organisation and The Recovery Officer and Assistant Provident Fund Commissioner Employees'' Provident Fund Organisation Vs. Shirine Velankanni Senior Secondary School, , has observed. In Paragraph-19 of the said judgment, the Division Bench has held as follows:
The authorities empowered to take action to recover damages u/s 14B are different from the authorities constituted for the purpose of determining the dues u/s 7A of the Act. It is only when the employer fails to pay the amount determined by the authorities, the statutory authorities empowered u/s 14B takes re-course to the penalty proceedings. The levy of damage serves as a deterrent.
If the contention of the learned counsel for the respondents is accepted, then, such interpretation will only result in anomaly, because the officers are different. The Central Provident Fund Commissioner has been empowered both u/s 7A as well as u/s 14B of the EPF Act. For any reason if the Central Provident Fund Commissioner passes an order u/s 14B of the EPF Act, and if we hold that he is an officer referred to in Section 7A of the EPF Act and therefore as against the order made by him u/s 14B of the EPF Act, Section 7O is to be complied with, then, if the officer empowered as per Notification by the Central Government who is not an officer referred to in Section 7A of the EPF Act passes the order, then, to prefer an appeal against the said order, Section 7O need not be complied with. Thus, if the contention of the learned counsel for the respondents is to be accepted, such interpretation will lead to absurdity. No law can be interpreted in such a way to result in absurdity. The purpose of interpretation of any Statute primarily is to take forward the object of the Act and not to the detriment of the very object of the Act. At any rate, any interpretation given to any provision of the Act shall not be allowed to result in absurdity. In this case, I am of the strong view that if the interpretation made by the learned counsel for the respondents is accepted, it will result only in absurdity and therefore the same cannot be accepted.
In this regard, we may usefully refer to similar provisions contained in the Employees'' State Insurance Act, 1948 ("ESI Act" in short). In Section 45A of the ESI Act, determination of contributions is made under the Act, by the authorities referred to therein. This is analogous to Section 7A of the EPF Act. Section 85B of the ESI Act deals with power to recover damages. This provision is analogous to Section 14B of the EPF Act. u/s 75 of the ESI Act, an appeal would lie to the Employees'' Insurance Court against the order made u/s 45A as well as the order made u/s 85B of the ESI Act. Section 75(2-B) of the ESI Act mandates that the employer shall make pre-deposit of 50% of the amount due. The said provision reads as under:
75(2-B) No matter which is in dispute between a principal employer and the Corporation in respect of any contribution or any other dues shall be raised by the principal employer in the Employees'' Insurance Court unless he has deposited with the Court fifty per cent of the amount due from him as claimed by the Corporation:
(Emphasis supplied)
Provided that the Court may, for reasons to be recorded in writing, waive or reduce the amount to be deposited under this sub-section.
If one closely looks into Section 75(2-B) of the ESI Act, a marked difference between this provision and Section 7O of the EPF Act could be noticed. Here u/s 75(2-B) of the ESI Act, any contribution or any other dues, if challenged, then 50% of the amount so due shall be deposited. The expression "any other dues" as found in Section 75(2-B) of the ESI Act is missing in Section 7O of the EPF Act. As I have already pointed out, this is a conscious omission made by the Parliament reflecting the intention of the Parliament that an order made u/s 14B of the EPF Act does not attract Section 7O of the EPF Act.
Now, turning to the judgment of the Bombay High Court in Writer Safeguard Pvt. Ltd. case, referred to above, the Bombay High Court has elaborately dealt with the above legal position as I have done herein. The Bombay High Court has the benefit of referring to the judgment of the Delhi High Court in Old Village Industries Ltd. Vs. The Asstt. Provident Fund Commissioner Employees Provident Fund Organisation and Another, . In the said judgment, the Delhi High Court has held that if the appeal is preferred against the order u/s 14B, then the Tribunal cannot insist for pre-deposit of assessed amount as provided u/s 7O of the EPF Act. Expressing agreement with the said view taken by the Delhi High Court, the Bombay High Court has also fallen in line with the view taken by the Delhi High Court. In paragraph-10 of the judgment, the Bombay High Court has extracted the relevant portion of the judgment of the Delhi High Court, which reads as under:
There is nothing in the section so as to extend its application to an order passed u/s 14B of the Act. An employer has a right to prefer an appeal against an order u/s 14B, u/s 7(1) of the Act, but the pre-condition of deposit for entertainment of such an appeal is not covered u/s 7O of the Act. Thus, I have no hesitation in rejecting the contention of the respondents that it would be mandatory for the employer to deposit 75% of such amount before appeal can be entertained or even that there cannot be stay of recovery of the said amount by the Appellate Authority. The argument raised on behalf of the respondents would be untenable even for another reason that damage is the consequence of the demand raised u/s 7A of the Act. The provisions of Section 14B of the Act attracted only if there is default on the part of the employer. It being a consequential liability essentially must fall in a category of not the principal liability to attract stringent provisions of pre-deposit to the hearing of the appeal. Such provisions being related to revenue would be construed strictly whether to the advantage or disadvantage of the person upon whom the liability is sought to be fastened. Once the provisions of Section 7O does not include an appeal against an order u/s 14B, then it would be in no way permissible to include such an order by implication or otherwise.
Thus the Delhi High Court as well as the Bombay High Court have also taken a similar view as I am inclined to take in the present case.
In view of all the above, I hold that for preferring an appeal against the order made u/s 14B of the EPF Act, Section 7O of the Act is not applicable. Therefore, the Tribunal cannot insist for pre-deposit as provided in Section 7O of the Act. Therefore, the writ petition is allowed and the impugned order directing the petitioner to deposit Rs. 10,00,000/- is hereby set aside. Consequently, the connected miscellaneous petition is closed. No costs.