CGIT2 Delhi Order dated 15.09.2026 in EPF appeal no. D-2/05/2023 Ghatak Security Services vs APFC/RPFC Noida on 15 September 2026

BEFORE CENTRAL GOVERNMENT INDUSTRIAL TRIBUNAL CUM LABOUR COURT, No.2 DELHI; Appeal no. D-2/05/2023

M/s. Ghatak Security Services 102, Bhagmal, Complex, Naya Bans Market Sector-13, Noida, UP-201301.

Through: - Sh. Ravi Ranjan Tripathi, Ld. Counsel for the Appellant. …Appellant Vs.

RPFC/ APFC, Noida. Employees’ Provident Fund OrganizaƟon, Regional Office Noida, Nidhi Bhaswan, A-2c, Sector-24, Noida-201301.

Through: - Sh. BB Pradhan, Ld. Counsel along with Sh. Ravindra Kumar, AR for the Respondent. …Respondent Order dated: - 15.09.2026

Appellant, a covered establishment under EPF & MP Act (Employees' Provident Funds and Miscellaneous Provisions Act), 1952 has assailed the order dt 05.05.2022 passed by the Respondent under SecƟon 14B and 7Q whereby the Respondent has determined an amount of Rs. 2,13,702/- under SecƟon 14B and Rs. 1,31,800/- under SecƟon 7Q respecƟvely on several grounds interalia that the Respondent while passing the order has not applied judicial mind to consider, analyze the facts of this case; Impugned order is perverse and contrary to the provision of EPF & MP Act, 1952; Respondent is having the discreƟonary power because the word "may" while imposing the damages has been used and no miƟgaƟng circumstances has been taken into consideraƟon while imposing the damages; reasonable opportunity has not been

provided. As such, he has submiƩed that Order passed by the Respondent be set aside and recalled.

Respondent has filed a counter-reply of the appeal. First of all, the Respondent denied the allegations, claim, demand, contentions of the appeal except to the extent, specifically admitted herein below; Appeal is barred by limitation. Thereafter, the Respondent has narrated the objective of imposing the penalty as a deterrent measure on the employer preventing them for not carrying out the statutory obligation to make payment to the Provident Fund in time. He submitted the order under Section 14B and 7Q passed is quite reasoned order. The Respondent has provided ample opportunity to the Appellant as per the principle of natural justice. He further submitted no discretionary power is vested in the Inquiry Officer. The Ld. Counsel for the respondent submitted that the appeal against the order passed under section 7Q of the Act is not maintainable. Reliance was placed upon the judgment of Hon’ble Supreme Court of India in M/s. Organo Chemical Industries & Anr. Vs. Union of India & Ors. (1979) 4 SCC 573 where it was categorically held that section 14B of the Act was enacted to deter the employers and to thwart them from making defaults in carrying out their statutory obligations to make payments to the Provident Fund.

The Ld. Counsel for the respondent has further relied upon the judgment of Hon’ble Supreme Court of India in Horticulture Experiment Station, Gonikoppal, Coorg vs. the RPFC (Civil Appeal No. 2136 of 2012 order dated 23.02.2022) where it was held that any default or delay in the payment of EPF contribution by the employer under the Act is a sina- qua-non for imposition of levy of damages under section 14B of the Act, and mens rea and actus reus is not an essential element for imposing penalty/damages for breach of civil obligations. In all, he has submitted that the appeal is liable to be dismissed.

I have heard the argument at bar, perused the record as well as gone through the impugned order in quesƟon. Before parƟng any opinion on the issue, it is necessary to reproduce the secƟon 14 B as well as SecƟon 7 Q of ‘the Act’:- SecƟon 14B Power to recover Damages-Where an employer makes default in the payment of any contribuƟon to the Fund [, the [Pension] Fund or the Insurance Fund] or in the transfer of

accumulaƟons required to be transferred by him under sub- secƟon (2) of secƟon 15 [or sub-secƟon (5) of secƟon 17] or in the payment of any charges payable under any other provision of this Act or of 5 [any Scheme or Insurance Scheme] or under any of the condiƟons specified under secƟon 17, [the Central Provident Fund Commissioner or such other officer as may be authorised by the Central Government, by noƟficaƟon in the Official GazeƩe, in this behalf] may recover 7 [from the employer by way of penalty such damages, not exceeding the amount of arrears, as may be specified in the Scheme:] [Provided that before levying and recovering such damages, the employer shall be given a reasonable opportunity of being heard]: [Provided further that the Central Board may reduce or waive the damages levied under this secƟon in relaƟon to an establishment which is a sick industrial company and in respect of which a scheme for rehabilitaƟon has been sancƟoned by the Board for Industrial and Financial ReconstrucƟon established under secƟon 4 of the Sick Industrial Companies (Special Provisions) Act, 1985,subject to such terms and condiƟons as may be specified in the Scheme.] 7 Q Interest Payable by the Employer-The employer shall be liable to pay simple interest at the rate of twelve per cent. per annum or at such higher rate as may be specified in the Scheme on any amount due from him under this Act from the date on which the amount has become so due Ɵll the date of its actual payment: Provided that higher rate of interest specified in the Scheme shall not exceed the lending rate of interest charged by any scheduled bank.]

Rate of levy of damages is given in Para 32 A of the Employees’ Provident Funds Scheme, 1952 and subsequent Para 8A of the Employees’ Deposit Linked Insurance Scheme, 1976 and Para 5 of the Employees’ Pension Scheme, 1995 which have empowered the CPFC or any such authorized officer to recover from the employer by way of penalty, damages at the rate given below:- S.No. Period Of default Rate of damages (percentage of arrears per annum)

(a) Less than 2 months Five

(b) Two months and above but less than four months Ten

(c) Four months and above but less than six months FiŌeen

(d) Six months and above Twenty five

Arguments of the appellant is centred around the fact that it had not been given the proper opportunity to defend its stand. He had deposited the amount during course of the enquiry but that was not considered and no miƟgaƟng circumstances was considered by the respondent department while assessing the dues.

On the other hand, arguments of the Ld. Counsel for the respondent is centred around the fact that proper opportuniƟes were granted to the appellant and the deposit made by the appellant during the course of enquiry was considered and the amount deposited was reduced from the final assessment. So far so, the miƟgaƟng circumstances is concerned, the respondent’s plea is that the respondent authority has not been vested any discreƟon to reduce the damages.

First of all, the issue of mens rea is required to be dealt with. the Ld. Counsel for the appellant has relied upon the judgment of Hon’ble Supreme Court in the case of Mcleod Russel India Limited vs. Regional Provident Fund Commissioner, Jalpaiguri & Others reported in (2014)15 S.C.C 263 and DCW Employees Co-operaƟve Canteen Pvt. Ltd vs. P.O. EPFAT, 2018 LLR 672, decided by the Hon’ble High Court of Madras, where it was held that mens rea is an important factor to be considered while levying damages. He has also placed reliance upon Assistant Provident Fund Commissioner vs. Management of RSL TexƟle India Pvt. Ltd., reported in 2017 LLR 337, where the Hon’ble Supreme Court held that mens rea is required before levy of damages. It is further submiƩed that the respondent even preferred a review peƟƟon under arƟcle 137 of consƟtuƟon of India seeking review of the said judgment, where the Hon’ble Supreme Court dismissed the said peƟƟon and upheld the impugned judgment dated 13.11.2013. Therefore, the judgment in RSL TexƟle India Pvt. Ltd. aƩained finality.

On the other hand, the Ld. Counsel for the respondent has relied upon the judgment of Hon’ble Supreme Court of India in Horticulture Experiment Station, Gonikoppal, Coorg vs. the RPFC (Civil Appeal No. 2136 of 2012 order dated 23.02.2022) where it was held that any

default or delay in the payment of EPF contribution by the employer under the Act is a sina-qua-non for imposition of levy of damages under section 14B of the Act, and mens rea and actus reus is not an essential element for imposing penalty/damages for breach of civil obligations.

I have given my thoughtful consideration of the said contention. The judgment in Mcleod Russel India Limited and Horticulture Experiment Station (Supra) are of equal strength of benches. I have also gone through the judgment of Hon’ble Supreme Court in Sandeep Kumar Bafna vs. State of Maharasthra & Others, AIR 2014 SC 1745 where it has been held that a statement of law pronounced by a Division Bench is binding upon a subsequent Division Bench of same or lesser strength. If any contrary view is expressed by a later bench, the same would fall within the category of per incuriam and the earlier judgment of the co-ordinate bench would prevail. Even the Hon’ble Supreme Court of India in the recent judgment, i.e., M/s. Kerala Industrial Infrastructure Development Corp. v. Central Board of Trustees and Anr. (Civil Appeal no. 7724 of 2023), pronounced on 09.09.2026, has expressed doubt of the proposition laid down in Horticulture Experiment Station (supra) and referred the matter to a larger bench. Therefore, the respondent has the discretion to waive or reduce the damages.

From the perusal of the impugned order, it has been inferred that the noƟce dated 06.07.2021 was issued to the establishment direcƟng them to appear on 23.07.2021 to give their representaƟon. Said noƟce had also enclosed the statement showing the number of defaults as per Annexure A. Annexure A menƟons the default made by the establishment in deposiƟng the PF dues of the wage month from 10/2013 to 01/2020. Most of the payment of PF dues has been remiƩed in the year 2017, remaining payment have been made in the year 2018, 2019 & 2020. The contenƟon of the Appellant, first is that the respondent department has not given him the opportunity, but that it is not true. Record speaks that a number of Ɵmes the Appellant has been represented through its representaƟves and as per record submissions have also been made by the Appellant, which have been duly considered.

Next leg of argument of the Appellant is that he has deposited the amount during the proceedings and the respondent has not considered the same. But that argument has also no substance because the Respondent itself has taken into consideraƟon that aspect while determining the dues aŌer deducƟng the amount deposited both under Sec. 14B and 7Q and determined the assessed amount to the tune of Rs. 2,13,702/- aŌer deducƟng the payment of Rs. 24,698/- as well as of Rs. 42,911 under Sec. 14B and 7Q respecƟvely.

Third leg of argument of the Appellant is that the department has not taken into consideraƟon the miƟgaƟng circumstances while determining the dues in regard to the delayed remiƩance of the payment to the provident fund and interest. He has relied upon the word “may” itself. However, the Appellant during the course of argument has not produced any circumstances which prevented him from deposiƟng the remiƩance in Ɵme. No balance sheet, no hardship has ever been produced. Establishment has been closed in 2019 as reported, however, the delay has been made conƟnuously from the year 2013 and it appears that the deposit was started only when the assessment has been made under Sec 7A. Therefore, the Respondent authority has rightly not considered any miƟgaƟng circumstances while determining the dues in respect of delay in remiƩance of provident fund as well as interest thereon.

In view of the discussion above the Appeal stands dismissed. The Appellant is hereby directed to deposit the requisite amount with the Respondent within a period of one month from the date of receipt of a copy of this order. The amount of Rs. 53,426/- deposited by the Appellant by way of challan dated 12.08.2023 with the respondent as a condiƟon imposed while granƟng stay, is required to be adjusted while making final payment.

Date: 15.09.2026

ATUL KUMAR GARG

(Presiding Officer) CGIT-Cum- Labour Court-II