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Sec.14 B and Sec.17 B of EPF Act – Damages under sec.14 B are recoverable jointly and severally from Saroda Tea Company Ltd. as well as Everaeady Industries (India ) Ltd Now Mcleod Russel India Ltd – Apex court up held that The Special Bench of the High Court of Calcutta in Dalgaon Agro Industries Ltd. has rendered a detailed judgment on the conundrum before us. Succinctly stated, the Special Bench has opined that (a) the transferor and the transferee managements remain jointly and severally liable under Sections 14B and 17B of the Act for all sums due including damages; and dismissed the appeal = MCLEOD RUSSEL INDIA LIMITED ….. APPELLANT vs REG. PROVIDENT FUND COMMISSIONER, JALPAIGURI & ORS. ….. RESPONDENTS = 2014 – July. Part – http://judis.nic.in/supremecourt/filename=41734

Sec.14 B and Sec.17 B of EPF Act – Damages under sec.14 B are recoverable jointly and severally from Saroda Tea Company Ltd. as well as Everaeady Industries (India ) Ltd Now Mcleod  Russel India Ltd – Apex court up held that The Special Bench of the  High  Court  of  Calcutta  in  Dalgaon  Agro Industries Ltd. has rendered a detailed judgment  on  the  conundrum  before us.    Succinctly  stated,  the  Special  Bench  has  opined  that  (a)  the transferor and the  transferee  managements  remain  jointly  and  severally liable under Sections 14B and 17B of the Act  for  all  sums  due  including damages; and dismissed the appeal = 

Eveready  Industries  (India)  Ltd.

undauntedly contended before the RPF Commissioner, Jalpaiguri, in the  event

in futility, that proceedings under Section 14B of the EPF  Act  against  it

were unjustified as it was not the “employer” defined under Section 2(e)  of

the  EPF  Act,  which  defaulted  in   paying   contributions. 

It held that on  a  conjoint  reading

of Sections 14B and 17B of the EPF Act  it  was  clear  that  damages  under

Section 14B were recoverable jointly and severally from Saroda  Tea  Company

Ltd. as well as Eveready Industries  (India)  Ltd.

After  tabulating  the

rates of damages, i.e. percentage of arrears  per  annum  depending  on  the

period of default,  damages  were  assessed  at  Rs.70,37,950;  and  it  was

further  directed  that  failure  to  deposit  penal  damages   within   the

stipulated period would attract the provisions of  Section  7Q  of  the  EPF

Act, thereby enhancing the liability to include simple interest at the  rate

of 12 per cent per annum on the damages.

 

The Special Bench of the  High  Court  of  Calcutta  in  Dalgaon  Agro

Industries Ltd. has rendered a detailed judgment  on  the  conundrum  before

us.    Succinctly  stated,  the  Special  Bench  has  opined  that  (a)  the

transferor and the  transferee  managements  remain  jointly  and  severally

liable under Sections 14B and 17B of the Act  for  all  sums  due  including

damages; (b) the transferor’s indebtedness comes to a halt on  the  date  of

the transfer but includes the sums computed under both these  Sections  till

the date of transfer; (c) the transfer does not bind  either  the  employees

or the Fund; (d) the transferee stands cautioned by virtue of Sections  1(3)

and  17B  that  the  erstwhile  as  well  as  the  current  employer  remain

responsible for liabilities under both the  Sections  as  a  consequence  of

liability being that of the establishment in  question  of  which  employers

are merely fictional representatives to facilitate  recovery  of  dues;  (e)

recovery of any amount due is protected under  Section  11(2)  of  the  Act,

which grants priority to the amount so due over all other  debts  under  any

other statute as being the first charge on the assets of the  establishment;

(f) the Act has  innovated  radical  and  effective  modes  of  recovery  as

evident from Sections 8B and 8F, which  further  reinforces  the  fact  that

liability to pay dues  is  of  the  establishment  recoverable  through  the

employer; (g) liability  under  Section  14B  admits  no  waiver  except  as

provided; (h) damages  could  be  recovered  regardless  of  any  reasonable

period  of  prescription;  (i)  the  covenants  in  the  Transfer  Deed  are

irrelevant for determination and recovery  of  dues  and  damages;  and  (j)

criminal liability would be attracted only in  the  event  the  outstandings

are not completely recovered.=

In  our  opinion,  Section

14B is  complete  in  itself  so  far  as  the  computation  of  damages  is

concerned.   It is conceivable that the money due  from  an  employer  would

have to be calculated under Section 7A, and in  the  event  the  default  or

neglect of the employer is contumacious and contains the requisite mens  rea

and actus reus yet another exercise of  computation  has  to  be  undertaken

under Section 14B.    Where the Authority is of  the  opinion  that  damages

under Section 14B need to be imposed, the  computations  would  come  within

the purview  of  Section  14B  and  it  would  be  recoverable  jointly  and

severally from the  erstwhile  as  well  as  the  current  managements.    A

perusal of the Appeals Section, namely, 7I is illustrative of the fact  that

these exercises are distinct from each other as per the  enumerations  found

in the first sub-Section of Section 7I.   It also appears logical to us,  in

the wake of the numerous and different dates  of  amendments,  that  Section

7A(2) would also be available to proceedings under Section 14B of  the  Act.

The applicability of  Civil  Procedure  Code,  1908  to  proceedings  under

Section 14B has not specifically been barred by the statute.

13         It is necessary to clarify that Eveready Industries (India)  Ltd.

had in the interregnum of this litigation changed its name to Mcleod  Russel

India Ltd.  In view of our above analysis,  it  is  our  considered  opinion

that the impugned Judgment deserves to be upheld.   It contains  a  detailed

and logical exposition of facts  as  well  as  the  law  pertaining  to  the

present  dispute.  We  also  approve  the  pithy  observations  of  the  RPF

Commissioner, Jalpaiguri in the subject Order that failure on  the  part  of

the employers  to  make  remittances  of  accumulations  and  contributions,

undermines the objectives and purposes of the statute.   We underscore  that

the liability of the Fund to  pay  interest  to  subscribers  regardless  of

whether  employers  have  paid  their   dues,   runs   relentlessly.     The

Commissioner has specifically recorded that he has taken a lenient  view  in

the matter and has eschewed imposition of damages to the extent of  100  per

cent of the arrears even though this is envisaged  by  the  EPF  Act.    The

Appellant-Petitioner has, in  the  circumstances  of  the  case,  been  also

rightly burdened with the payment of interest under Section 7Q  of  the  EPF

Act.   Accordingly, the Appeal is  dismissed  and  the  interim  Orders  are

recalled.   Although, it is our opinion that the Appeal is wholly devoid  of

merit, we refrain from imposing costs.

2014 – July. Part – http://judis.nic.in/supremecourt/filename=41734- for full text – LAW FOR ALL

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