EMPLOYER DEFAULTING IN CONTRIBUTING TOWARDS EPF IS LIABLE TO PAY DAMAGES - SC

Recently, the Apex Court held that any default or delay in the payment of Employees Provident Fund (EPF) by the employer is the only sine qua non (essential requirement) for the imposition of damages u/s 14B of the Employees Provident Fund & Miscellaneous Provisions Act of 1952 ("The Act"). 

BACKGROUND

The appellant failed to comply with the Act from January 1, 1975, to October 31, 1988. The proceeding was initiated against the appellant u/s 7A for not contributing towards employers' share of EPF. The competent authority assessed an amount of ₹74,288 which was paid by the appellant. Thereafter, the competent authority a notice to charge damages for the delayed payment provident fund amount levied and directed the appellants to pay ₹85,548 as damages.

The appellant challenged the order before the Karnataka High Court. The Karnataka HC bench held that once the default in payment is admitted, the damages are consequential and the employer is under an obligation to pay the damages for delay in payment. The same was challenged before the Top Court.

HELD

The SC relied on the decision of Union of India vs Dharmendra Textile Processors and others, wherein it was held that "mens rea or actus reus is not an essential element for imposing damages for breach of civil obligations." 

A Bench of Justices Ajay Rastogi and Abhay S Oka dismissed the appeal.