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.
advocatemmmohan 
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