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Judgment
The petitioner, a charitable Society registered under the provisions of the Travancore-Cochin Literary, Scientific and Charitable Societies Registration Act, 1955, is running a special school by name 'Snehanilayam' for differently abled children. The school was started in the year 1977 and the staff were paid only honorarium for their service and to secure them some benefits under the social security schemes, in the year 2013, the petitioner approached the Employees Provident Funds Origanisation for covering the school under the provisions of the Employees' Provident Fund Scheme, 1952.
The Assistant Provident Fund Commissioner, the 2nd respondent issued Exhibit -P1 proceedings dated 23.08.2013 making the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as the 'Act' for short) along with the schemes framed thereunder applicable to the school with effect from 05.06.2003 under the category "Educational Institution". The petitioner was directed to remit the arrears of contributions for the period from June, 2003 to July, 2013.
The petitioner then requested the Assistant Provident Fund Commissioner to waive off the employees contribution for the period prior to 01.10.2013 as no contribution could be collected from the employees in the case of retrospective coverage and due to the financial difficulties the special school is facing. Later, the 2nd respondent by Exhibit -P4 allowed waiver of employees share for the pre-discovery period from June 2003 to February 2013. Accordingly, the petitioner remitted an amount of Rs.9,91,165/- towards contribution for the period from 05.06.2003 to 24.12.2013 evidenced by Exts. P5(a) to P5(i) series challans.
While so, the 2nd respondent issued Ext. P6 notice of hearing under the 1st proviso to Section 14-B and for payment of interest under Section 7-Q of the Act for belated remittance made during the period from 05.04.2003 to 24.12.2013. An amount of Rs.8,66,663/- was demanded as damages and a sum of Rs.6,25,402/- was demanded as interest. Pursuant to Ext. P6, Ext. P8 proceedings under Section 14-B was issued by the 2nd respondent, levying a sum of Rs.8,66,663/- as damages for belated remittance of contribution. Further, Ext. P9 proceedings making the petitioner liable for interest under Section 7-Q of the Act was also passed by the 2nd respondent. The petitioner remitted the entire interest levied under Section 7-Q as evidenced by Ext. P7 (a) to P7(i) documents. According to the petitioner, they tried to appraise the 2nd respondent that they are not liable to pay damages and expected a favourable decision and therefore did not prefer any appeal against Ext. P8 with in the stipulated period. However, the petitioner was served with Ext. P10 notice of demand to defaulter by the 3rd respondent Recovery Officer demanding payment of a sum of Rs. 11,55,350/-towards damages and interest under Section 7-Q. Challenging Exts.P8 and P10, the petitioner has approached this Court.
According to the petitioner, the petitioner had not collected the employees share for the pre-discovery period and while issuing Ext. P10 notice of demand, the remittance already made towards interest levied under Section 7-Q vide Ext. P7 series challans were not taken into account and that Ext. P8 order issued under Section 14-B is vitiated by non-application of mind. The petitioner also contends that the mitigating circumstances and other relevant factors in deciding the question of damages under Section 14-B were not considered by the 2nd respondent while issuing Ext. P8.
A Statement has been filed on behalf of the respondents wherein it is stated that Ext. P8 order was passed after hearing the petitioner and with due application of mind and in conformity with the statutory provisions and that the petitioner has not availed of the statutory remedy available under Section 7(i) of the Act.
Heard Smt. A.K Preetha, the learned Counsel for the petitioner and Sri. S. Prasanth, the learned Standing Counsel for the respondents. 8. According to the petitioner, Ext. P8 is vitiated by non application of mind. Smt. Preetha, the learned counsel for the petitioner submits that it appears from Ext. P8 that the 2nd respondent has issued the said order after making modifications in some other order passed by him which was retained in the computer system. The counsel invited this Court's attention to one paragraph in Ext. P8 which reads as follows:-
"Moreover, there is ample proof that even the employees share of contribution deducted from the salary of the workers were not remitted promptly by the employer, which confirms that the employer had utilized the amount for personal use or for the development of the business." (emphasis supplied)
The fact that the remittance of employees share for the pre-discovery period was waived by Ext. P4 was omitted to be taken note of by the 2nd respondent while passing Ext. P8. Further, the establishment is a special school for differently abled children. I find substance in the argument of the counsel for the petitioner that the finding of the 2nd respondent in Ext.P8 that the employer had utilized the employees' share of contribution deducted from the salary of the workers for personal use or for the development of the business vitiates Ext.P8 on ground of non-application of mind. Though the order says there is ample proof for the default, the order does not speak of any such proof. The 2nd respondent in Ext. P8 recites that he has applied his mind to all relevant factors and reminds himself of the Apex Court's direction to pass reasoned order after due application of mind. However, the order shows that there is no application of mind while passing the order under Section 14-B imposing damages. It does not disclose consideration of any relevant factors for levying the damages under Section 14-B. Further, on going through Ext.P8, this Court also feels that the 2nd respondent has issued the said order after making modifications in some other order passed by him which was retained in the computer. The counsel also referred to the decision in Standard Furniture, Calicut v. Registrar, EPF Appellate Tribunal and others 2020 (3) KHC 793 wherein a Division Bench of this Court cautioned the authorities exercising powers under Section 14-B of the Act from passing orders using standard printed forms especially when they exercise quasi-judicial functions. The Court held that various factors have to be adjudicated before levying penalty under Section 14-B and therefore printed forms are unsuited for the purpose. The Court also directed the Employees Provident Funds Authorities to ensure that the practice of using printed standard forms to issue orders under Section 14-B of the Act is stopped forthwith.
Very recently, the Apex Court, in Union Public Service Commission v. Bibhu Prasad Sarangi and others (2021 SCC Online SC 187) deprecated the use of 'cut-copy-paste' in Judgments and held that a prolific use of the 'cut-copy-paste' function should not become a substitute for substantive reasoning which constitute the soul of a judicial decision.
It is trite that levy of damages under Section 14-B is not automatic. All circumstances which led to the delay in remitting the Provident Fund contribution, mitigating circumstances, existence of mens rea or actus reus to contravene a statutory provision etc have to be considered by the authorities before levying damages under Section 14-B. Such adjudication cannot be done in a cyclostyled form or manner. A perusal of Ext. P8 shows that it is a cut-copy-paste in an existing item retained in the computer. The recital in the order 'I have applied my mind' without actual application of mind to the facts of the case and the relevant materials, will not make the order a reasoned order as required in law. Ext.P8 order cannot be sustained. Further, the remittance already made under Section 7-Q cannot be demanded in Ext.P10 notice of demand. I set aside Ext.P8 order levying damages under Section 14-B and Ext.P10 notice of demand to defaulter and direct the 2nd respondent to pass fresh orders after hearing the petitioner. Since the matter is pending before this Court for more than 5 years and since this Court finds that Ext. P8 order is vitiated by non-application of mind, the petitioner need not be relegated to avail the statutory remedy of filing appeal under Section 7(i) of the Act. The amount remitted by the petitioner as condition for interim order in the writ petition will remain with the respondents till fresh orders are passed as above and will be adjusted against the final demand.
The writ petition is disposed of, as above.