Delhi HC: Mens Rea Essential Before Passing an Order U/S 14b of EPF Act

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In the matter of M/s Durable Doors and Windows v APFC, Gurugram, the bench allowed the Petitioner’s appeal holding that mens rea is an essential condition to be fulfilled when passing an order under Section 14B of the EPF Act.

Brief facts of the case

The Petitioner has moved to the High Court challenging the order dated 12.10.2020 passed by the Central Government Industrial Tribunal. The order had directed the Petitioner to deposit 20% of the assessed damages amount within three weeks of the order’s passing. This is a precondition for entertaining the petition filed by the Petitioner against the 18.10.2019 order of the Assistant Provident Fund Commissioner.

Arguments

The Petitioner’s Counsel argues that the original 2019 order by the APFC that was passed under Sections 14B and 7Q of Employees Provident Fund and Miscellaneous Provisions Act, 1952, was almost an ex-parte order as the Petitioner did not get adequate opportunity to file its documents before the APFC.
Though the Petitioner’s Authorized Representative appeared on the given dates before the APFC, various documents could not be filed as the Managing Partner had to undergo by-pass surgery. Hence the assessment made by the APFC for damages and interest for delayed remittance of EPF dues is without any documents having been placed on record.
Additionally, mens rea is an essential condition of an order to be passed under Section 14B of the EPF Act, and hence both the orders are unsustainable.
The Counsel for the Respondent submits that on 28.08.2019, the owner of the Petitioner-Company had appeared before the APFC and sought time. Thereafter, repeatedly the matter was adjourned, and in fact, the stand of the Petitioner was that due to financial difficulties, the deposit could not be made. It was only after considering these facts that the APFC passed the original order.

Court’s Observation

The bench observes that because no documents or written objections were filed by the Petitioner, the order was not one on merits. Hence the question of mens rea has not been considered.
Citing the case of Mcleod Russel India Limited v Regional Provident Fund Commissioner, Jalpaiguri 2014 (142) FLR 406 (SC) the court said that the finding of mens rea is an essential condition required to be satisfied before passing an order of damages under Section 14B.
Court’s Order
The bench noting that since the APFC order itself is not one on merits, it would not be useful to allow CGIT to consider the matter again. Hence, both the orders are set aside, and the Petitioner is given one final opportunity to file its objections and documents before the APFC on 9th November 2020.

The judgment can be accessed here.


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