Penal Damages Under Sec.14b Of P.f.act. - PDF Download

Dear Saswata ji,
I just repeat what I said. I said, whether you pay salary to employees or not, you are liable to make statutory remittances on due dates.

Dear Mr. Shashi ji,
Regarding your quarry here is a case study and S.C judgement please see the attachment. However, what Mr. B. Saikumar is saying is true.
Regards,
PBS KUMAR

Sir(s),
Under Section 2(b) of the EPF & Misc. Provisions Act, 1952 the word "basic wages" have been defined as "which are paid or payable". It means that even if the wages are payable (but not actually paid), the EPF contribution is required to be paid in time. Therefore, EPFO appears to be within its jurisdiction and correct in claiming interest or damages on such delayed deposit of EPF dues. The establishment, in my opinion, should have deposited EPF contribution regularly every month within time specified without waiting for payment of arrears on any increase of such wages.
There is no harm in representing to the appropriate authority for waiver of the interest/damanges citing correct facts.

In view of the amendment to Para 32-A on damages with effect from 2008, interest and damages can be chargeable separately as held in Roma Henrys case referred by learned member PBS Kumar. Since the delay in remitting contributions by the management in the instant case referred by Mr.Shashi can be termed technically as default within the meaning of the provisions of the Act and the Scheme,it attracts damages.However the P.F Authority enjoys discretion to reduce damages under certain circumstances and one of them can be absence of the element of willful default. Since levying damages is a penal action, the P.F Authority has to hear the employer in respect of damages during the course of which the employer can plead that the default is not intentional and can explain the circumstances to the satisfaction of the P.F Commissioner. In Victor Francis V. United Commercial Bank 2013 LLR 574(Jhar.HC), it was held that a case merits imposition of damages if the default is intentional.However,the employer needs to have very convincing grounds but not some loose excuses to prove bonafides of his action.Therefor there is no harm in praying for waiving or reduction of damages before the P.F Authority, if the hearing is not over.

B.Saikumar

Sir(s),

I fully agree with the views expressed by Shri B.Saikumar and Sh.Korgaonkar as above. But I will also like to submit that there is hardly any proof to establish whether the delay in making compliance was intentional or unintentional.

In modern set up of offices, the authorities who decide such cases of personal hearings have no measure to judge the intention of the employers. Moreover, by waiving of the damages at their level will definitely attract the attention of their seniors or departmental vigilance. Therefore, practically in all such cases damages are imposed (you may call it mechanically) whatsoever the plea of the employer may be. In present days of RTI, it becomes difficult for any officer to take risk in such like matters.

The golden rule is that the delays in deposits of statutory dues will definitely attract the provisions of damages as well as interest as per provisions of law, whatsoever the compelling circumstances with the employers may be.

In my opinion, the employers particularly their HR officials/Time Office Incharge dealing in EPF or other labour laws matters should have proper knowledge of all procedure as well as practical aspects and strictly make compliance in time so that they may not face such like situation.

Saikumar,
In Victor Francis V. United Commercial Bank 2013 LLR 574(Jhar.HC), it was held that a case merits imposition of damages if the default is intentional. citation pertain to charge sheet issued to employee and not on reduction of damages under PF Act.

Azim, Yes.You are right..The correct citation is APFC v.A.C.Nielsen Org,Garg Pvt.Ltd, 2013 LLR 653 (Guj HC).In the instant case, the P.F Tribunal converts penal damages into one of compensatory nature since the default is not willful.As Victoria Francis case and Nielsen case appear one after another in the list of cases with me, I erroneously mentioned the Victoria Francis case.The error is regretted and at the same time, thanks for the correction.
B.Saikumar
HR and Labour Law consultant

Dear All,
Our company has purchased a land from some other compnay. which have been already demand of pf Rs.550000/= but unforuntely our deal of purchased not done due to some reason. we have paid Rs.275000 +275000 (land owner +us) to pf department. Now deal of purchased has been stay by the court.
now pf has been raised rs. 1200000/= demand agaisnt section 7q &14B for the above mention amount. please let me know when purchase deal also not done & court has been given stay then why we are liable for pay damage/interest to pf department.
please give your valauable suggestion on urgent basis.
best regards
Sanjeev

Hi
If any one pls share the format reply of PF damage letter.