The Supreme Court ruled that the default or delay in payment of EPF contribution by employer is the only essential requirement for imposition of damages.
The establishment of the appellant is covered under the provisions of the Act 1952. On 31st December, 1974, under Code under scheduled head “Fruit Orchards”, the appellant(s) failed to comply with the provisions of Act 1952 from 1st January, 1975 to 31st October, 1988. For non-compliance of the mandate of Act 1952, proceedings were initiated under Section 7A and dues towards contribution of EPF for the intervening period of 1st January, 1975 to 31st October, 1988 amounting to Rs.74,288/- were assessed by the competent authority and after adjudication, that was paid by the appellant to the office of EPF.
Thereafter, the authorities issued a notice under Section 14B of the Act 1952 to charge damages for the delayed payment of provident fund amount which was levied for the period January 1978 to September, 1988 and called upon the appellant(s) to pay damages of Rs.85,548/-.
The appellant contended that the justification tendered by the appellant for which the contribution of EPF could not have been deposited has not been looked into by the authority and the element of mens rea or actus reus is one of the essential elements which has not been taken note of by the authority while imposing damages under Section 14B of the Act, 1952.
The respondent contended that mens rea is not an essential element for imposing penalty for breach of civil obligations or liabilities and mere contravention of the provisions of the Act or default in making compliance of the mandate of law as regards the civil liabilities are concerned, mens rea or actus reus is not the requirement of law to be considered, while imposing damages like, in the instant case, under Section 14B of the Act 1952.
The division bench of Justice Ajay Rastogi and Justice Abhay S. Oka said that the appellant indeed committed a breach of civil obligations/liabilities and after compliance of the procedure prescribed under the Act 1952 and for the delayed payment of EPF contribution for the period January 1975 to October 1988, after affording due opportunity of hearing as contemplated, order was passed by the competent authority directing the appellant to pay damages as assessed in accordance with Section 14B of the Act 1952.
The court stated that mens rea or actus reus is not an essential element for imposing penalty or damages for breach of civil obligations and liabilities.
The court while dismissing the appeals held that any default or delay in the payment of EPF contribution by the employer under the Act is a sine qua non for imposition of levy of damages under Section 14B of the Act 1952 and mens rea or actus reus is not an essential element for imposing penalty/damages for breach of civil obligations/liabilities.
Case title: Horticulture Experiment Station Gonikoppal, Coorg v/s The Regional Provident Fund Organization
Citation: CIVIL APPEAL NO(S). 2136 OF 2012