M/S. KEL Electrical Machines Ltd. vs The Regional Provident Fund Commissioner & Anr.

^1. The Petitioners are the Appellants in the Appeals filed under Section 7-I of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (for short, ‘the Act’), challenging the Orders imposing the penalty of damages under Section 14-B of the Act. The Petitioners are challenging the condition imposed by the Central Government Industrial Tribunal-cum-Labour Court, Ernakulam, to pay a percentage of the determined amount of damages under Section 14-B of the Act. In the impugned Orders challenged in all these Writ Petitions, except in W.P.(C) No.17214/2026, the Tribunal ordered payment as a condition for admission of the Appeal and in the impugned Order challenged in W.P.(C) No.17214/2026, the Tribunal ordered payment as a condition for granting stay of the Order impugned in the Appeal. In all Writ Petitions except W.P.(C) Nos.6852/2026 and 17214/2026, the conditional payment is 10% of the determined damages. In W.P.(C) Nos.6852/2026 and 17214/2026, the conditional payment is 20% of the determined damages. The Code on Social Security, 2020 (for short, ‘the Code’) was implemented with effect from 25.11.2025. In all these cases, Appeals are filed before the implementation of the Code in the years 2023 and 2024. The impugned Orders in all Writ Petitions, except in W.P.(C) No.6852/2026, were passed after the implementation of the Code. The impugned Order in W.P.(C) No.6852/2026 was passed before the implementation of the Code.

^2. I heard the learned Senior Counsel for the Petitioners, Sri. Benny Thomas, instructed by Adv. Sri. Abel Tom Benny and the learned Counsel for the EPF Organisation, Sri. K.C. Santhosh Kumar, Sri. Joy Thattil Ittoop and Sri. Lakshmy Kaimal.

^3. Learned Senior Counsel for the Petitioners contended that since the impugned Orders were passed subsequent to the implementation of the Code, it is the provisions of the Code which is applicable and hence the Tribunal has no power to impose a condition to pay any part of the damages in the Appeals filed by the Petitioners. In Section 23(1) of Chapter III of the Code providing Appeal to the Tribunal, the pre-deposit is made conditional only to the Appeal under Clause (a) therein which is against the determination and assessment of dues under Section 125 relating to Chapter III. Section 125 is the corresponding provision for Section 7-A of the Act. Appeal against the levy of damages is covered under Clause (b) of Section 23(1) of the Code. Sub-section (3) of Section 23 of the Code providing pre-deposit is applicable only to the Appeals filed under Clause (a) of Section 23(1) and not to Clause (b). Levy of damages is provided under Section 128 of Chapter XI of the Code which is the corresponding provision to Section 14-B of the Act. There is a rationale behind imposing pre-deposit only to the Appeals filed under Section 7-A of the Act which provides for the determination of contribution. The amount determined under Section 7-A has to go directly to the EPF and it is mandatorily be paid by the employer, whereas the amount imposed as damages under Section 14-B of the Act does not go to the EPF and hence the Legislature thought it fit to avoid pre-deposit in the Appeal filed against the Order under Section 14-B of the Act. There is discretion to the Officer while passing the Order under Section 14-B of the Act. The Officer has the power to impose damages not exceeding the amount of arrears, which implies that the Officer can impose penalty of damages below the amount of arrears taking into account the facts and circumstances of the case. Learned Senior Counsel invited my attention to Clause 32A of the Employees' Provident Funds (EPF) Scheme, 1952, which provides for different rates of damages with reference to the period of default. It is further contended that even going by the provisions in the Act, the Tribunal has no power to order a conditional pre-deposit. The Tribunal has no jurisdiction to impose pre-deposit of a percentage of the determined damages for entertaining an Appeal filed under Section 7-I of the Act against the Order passed under Section 14-B ordering recovery of damages. Section 7-O of the Act mandating pre-deposit is applicable only to the Appeals filed under Section 7-I challenging the Order passed under Section 7-A of the Act. It is clear from the language of Section 7-O that the same is applicable to the Appeals filed against the Order under Section 7-A. The Tribunal misconstrued and misunderstood Section 7-O and applied the same to the Appeals filed by the Petitioners directing pre-deposit of a percentage of the determined damages. Legislature never intended to include the Appeals filed against the Orders passed under Section 14-B of the Act within the scope of Section 7-O of the Act. The confusion, if any, on the interpretation of Section 7-O no longer exists since the very same provision is continued in more clear language when the Code was enacted by the Parliament. Learned Senior Counsel cited the decisions of the Delhi High Court in Old Village Industries Ltd. v. Assistant Provident Fund Commissioner, Employees’ Provident Fund Organization and Another [2005 (3) L.L.N. 572], Pashok Tea Estate v. Regional Provident Fund Commissioner [2014 SCC OnLine Del 4840] and Jai Balaji Security Services (Regd.) v. A.P.F.C. Delhi (North) [2015 SCC OnLine Del 14099] and the decision of the Allahabad High Court in Planner India Pvt. Ltd. v. Employees Provident Fund Appellate Tribunal and Others [2022 LLR 342] to substantiate the point that Section 7-O of the Act would apply only to the Appeals filed against the Orders passed under Section 7-A of the Act. Learned Senior Counsel concluded his arguments praying to set aside the impugned Orders to the extent to which it imposed condition to pay 10% / 20% of the penalty of determined damages by the EPF Authority.

^4. On the other hand, the learned Counsel for the EPF Organisation contended that the language of Section 7-O is clear and does not admit two interpretations. Section 7-A is referred in Section 7-O only for the purpose of referring to the Officer who passed the Order impugned in the Appeal. As per Section 7-O, pre-deposit is mandatory to entertain an Appeal which is filed against any Order passed by the Officer referred to in Section 7-A. There could not be any quarrel that the Order under Section 14-B imposing penalty of damages is also passed by the very same Officer who passes the Order under Section 7-A determining the contribution. Hence, Section 7-O is applicable to the Appeals filed under Section 7-I challenging the Orders passed under Section 7-A and Section 14-B alike. The Appeals are filed by the Petitioners before the implementation of the Code, and hence, it is the provisions under the Act which is applicable to the Appeals filed by the Petitioners. In all the Appeals, the Petitioners have filed a Composite Application for stay of the impugned Orders and waiver of pre-deposit, fully understanding that Section 7-O is applicable to the Appeals filed by the Petitioners challenging the Orders under Section 14-B. It is clear from the impugned Orders that the Tribunal directed payment of a percentage of the determined damages not as a condition for entertaining the Appeal but as a condition for granting the Interim Order of stay sought for by the Petitioners. In such case, the Tribunal has directed payment of the percentage of the determined damages exercising its discretion while granting the Interim Order. It is well settled by the decision of the Apex Court and the High Court that every Court and Tribunal is having discretion to impose any condition which it deems fit while granting Interim Order and the said discretion is not liable to judicial review. Learned Counsel for the EPF Organisation contended that the Petitioners have filed a Composite Application in the Appeals filed by them for seeking waiver of deposit and stay. In such case, the Petitioners sought waiver of pre-deposit correctly understanding Section 7-O which mandates pre-deposit for entertaining the Appeal. In such case, they cannot contend that Section 7-O does not contemplate pre-deposit for Appeal challenging the Orders passed under Section 14-B. The learned Counsel for the EPF Organisation cited the decision of the Madhya Pradesh High Court in The Center for Entrepreneurship Development (M/S) v. Regional Provident Commissioner [I.L.R. 2024 M.P. 2286], the decision of the Madras High Court in M/s. Sri Ramalinga Mills Ltd. B Unit v. Regional Provident Fund Commissioner - II [WP(MD) No.4870/2022], the decisions of the Hon'ble Supreme Court in Grindlays Bank Ltd. v. Central Government Industrial Tribunal and Others [1980 (Supp) SCC 420], Organo Chemical Industries and Another v. Union of India and Others [(1979) 4 SCC 573] and Assistant Collector of Central Excise v. Dunlop India Ltd. and Others [(1985) 1 SCC 260] and the decision of this Court in Koshy Philip v. Thomas P. Mathew and Others [2025 SCC OnLine Ker 13830] in support of their contentions.

I have considered the rival contentions.

^6. The first question to be answered is whether it is the provisions of the Act or the provisions of the Code which are applicable to the Appeals filed by the Petitioners. Chapter III of the Code replaced the Act. Section 23(1) and 23(2) of the Code replaced Section 7-I of the Act. Section 23(3) of the Code replaced Section 7-O of the Act. Section 125 of the Code replaced Section 7-A of the Act. Section 128 of the Code replaced Section 14-B of the Act. There could not be any dispute that, as per Section 23(3) of the Code, the pre-deposit for entertaining the Appeal is mandatory only for the Appeal filed against the determination and assessment of dues under Section 125 of Chapter XI of the Code. The Appeals, which are the subject matter in all these Writ Petitions, were filed before the implementation of the Code on 25.11.2025. In such case, even though the impugned Orders are passed by the Tribunal after the implementation of the Code, the provisions which are applicable to the Appeals filed by the Petitioners are the provisions under the Act. The words used in the relevant provisions both under the Act and the Code are that ‘No Appeal filed by the employer shall be entertained …. unless he has deposited …...’. Thus, the pre-deposit mandated should be paid before the entertainment of the Appeal. In these cases, all the Appeals are filed in the years 2023 and 2024. It is the law as on that date that is applicable to the Appeal and not the law as on the date of passing the impugned Orders. Hence, I hold that it is the provisions of the Act which are applicable to the Appeals filed by the Petitioners.

^7. The second question to be answered is whether the pre-deposit mandated under Section 7-O of the Act is applicable to the Appeals filed against the Orders under Section 14-B of the Act. Section 7-O of the Act provides that no Appeal by the employer shall be entertained by a Tribunal unless he has deposited 75% of the amount due from him as determined by an officer referred to in Section 7-A of the Act. As per Proviso to Section 7-O, the Tribunal has the power to waive or reduce the amount to be deposited under Section 7-O for reasons to be recorded in writing. Section 7-I of the Act provides for Appeals against the Orders including Orders under Section 7-A and Section 14-B. It is true that the Orders under Sections 7-A and 14-B of the Act are passed by one and the same Officer. Section 7-O refers to ‘the amount due’ from the employer as determined by an Officer referred to in Section 7-A. Under Section 7-A also, the Officer has to determine ‘the amount due’ from the employer. Under Section 14-B, the Officer is determining the penalty of damages and not the amount due. Since Section 7-O of the Act refers only to the amount due from the employer and does not refer to the penalty of damages and does not refer to the Officer referred to in Section 14-B, there is no ambiguity. Section 7-O is applicable only to the Appeals challenging the determination of the amount due from the employer under Section 7-A. I am unable to accept the contention of the learned Counsel for the EPF Organisation that the Officer under Section 7-A referred to in Section 7-O is referred only for the purpose of referring to the person who passed the Order of determination and not for referring to the Orders passed by such Officer.

^8. The Delhi High Court in Old Village Industries Ltd. (supra) held that the Legislature in its own wisdom has restricted the application of the provisions of Section 7-I to the Order passed under Section 7A and that once the provisions of Section 7-O does not include an Appeal against an Order under Section 14-B, then it would be in no way permissible to include such an Order by implication or otherwise. The decision in Old Village Industries Ltd. (supra) is followed by the Delhi High Court in Pashok Tea Estate (supra). In Jai Balaji Security Services (Regd.) (supra), the Division Bench of the Delhi High Court reiterated that Section 7-O of the Act would apply only to the Appeals filed against the Orders passed under Section 7-A of the Act. The Allahabad High Court in Planner India Pvt. Ltd. (supra) held that the provision of Section 7-O of the Act does not obligate an appellant to deposit any part of the damages as a pre-condition to maintain Appeal against the Order determining damages under Section 14-B. In the decision of the Madras High Court in M/s. Sri Ramalinga Mills Ltd. B Unit (supra) also, it is held that there is no requirement of pre-deposit for filing an Appeal against the Order imposing damages under Section 14-B of the Act, though the Order imposing the condition for stay is upheld. In The Center for Entrepreneurship Development (M/S) (supra), while considering the power of the Tribunal for stay in an Appeal against the Order under Section 14-B of the Act, Madhya Pradesh High Court held that although there is no provision for staying the Order of recovery during the pendency of the Appeal, the Tribunal is having discretionary power to stay the recovery and that Tribunal is also having discretion to stay the recovery on any condition or stay the Order in absolute or in part and it is permissible. I am in respectful agreement with the views expressed in these decisions. Hence, I hold that Section 7-O of the Act mandating pre-deposit is not applicable to the Appeals challenging the Orders under Section 14-B of the Act.

^9. The third question is regarding the nature of deposit ordered by the Tribunal. In the impugned Orders challenged in all these Writ Petitions, except in W.P.(C) No.17214/2026, the Tribunal ordered payment of a percentage of the damages as a condition for admission of the Appeal and in the impugned Order challenged in W.P.(C) No.17214/2026, the Tribunal ordered payment of a percentage of the damages as a condition for granting stay of the Order impugned in the Appeal. When the law is clear that there could not be any condition for pre-deposit for entertaining Appeals filed against the Orders passed under Section 14-B, on account of the mere fact that the Appellants sought waiver, the Appellants could not be compelled to make the pre-deposit. Since Section 7-O of the Act mandating pre-deposit is not applicable to the Appeals challenging the Orders under Section 14-B of the Act, the impugned Orders challenged in all these Writ Petitions, except in W.P.(C) No.17214/2026, are liable to be interfered with, to the extent of imposing condition for pre-deposit for admission of the Appeals.

^10. In W.P.(C) No.17214/2026, the Tribunal has ordered payment of a percentage of the determined damages under Section 14-B as a condition for granting stay of the impugned demand. The learned Counsel for the EPF Organisation submitted that it is the discretion of the Appellate Court/Tribunal to impose any condition when it grants Interim Order in the Appeal. In Grindlays Bank Ltd. (supra), the Hon'ble Supreme Court held that a Tribunal or body should be considered to be endowed with ancillary or incidental powers as are necessary to discharge its functions effectively for the purpose of doing justice between the parties. In Organo Chemical Industries (supra), the Hon'ble Supreme Court held that the expression ‘damages’ occurring in Section 14-B is, in substance, a penalty imposed on the employer for the breach of the statutory obligation; that the object of imposition of damages under Section 14-B serves the purpose of penalising the defaulting employer as also to provide reparation for the amount of loss suffered by the employees. In Dunlop India Ltd. (supra), the Hon’ble Supreme Court held that where matters of public revenue are concerned, it is of utmost importance to realise that Interim Orders ought not to be granted merely because a prima facie case has been shown; that the balance of convenience must be clearly in favour of the making of an Interim Order, and that there should not be the slightest indication of a likelihood of prejudice to the public interest. The learned Counsel for the EPF Organisation contended that the Tribunal exercised its discretion to impose payment of a percentage of the determined amount under Section 14-B as a condition for stay; that the Tribunal has got absolute discretion in the matter taking into account the facts and circumstances of the case; that the imposition of the condition of payment of 10% / 20% is very reasonable and the Petitioners could not be said to be prejudiced on account of the said condition; that even though the Tribunal has ordered payment of a percentage of the determined damages as a condition for admission of the Appeal in the impugned Orders challenged in all the cases except in W.P.(C) No.17214/2026, it is pertinent to note that the Tribunal has not imposed any further payment for granting the Interim Order.

^11. The Courts/Tribunals have absolute discretion to impose conditions in the interest of justice while passing Interim Orders, in the absence of any provision restricting the same. It is true that in all cases except W.P.(C) No.17214/2026, the Tribunal has not imposed any condition for granting Interim Order. Learned Senior Counsel for the Petitioners contended that if this Court holds that the Tribunal has discretion to impose condition for stay, it will have the effect of permitting the Tribunal to impose condition for entertaining the Appeal indirectly, which is not permissible under Section 7-O of the Act. I am unable to accept this contention. It is well settled that it is the discretion of the Court/Tribunal to impose any condition which is required in the facts and circumstances of the case while passing the Interim Order to secure justice. Merely because there is no condition for pre-deposit for entertaining the Appeal, it could not be said that the Courts and Tribunals do not have any power to impose condition while granting stay. As rightly contended by the learned Counsel for the EPF Organisation, the Tribunal might have avoided the condition for stay since there is already a condition for admission of the Appeals. Hence, even if the impugned Orders are liable to be set aside, the Tribunal is liable to be directed to consider the Applications seeking interim stay of the impugned demand, afresh.

In view of the aforesaid discussions and findings, these Writ Petitions are disposed of, issuing a writ of certiorari setting aside the impugned Orders and further directing the Industrial Tribunal to reconsider the Interim Application for stay in all the Appeals filed by the Petitioners afresh within a period of two months. Coercive proceedings on the basis of the Orders which are challenged in the Appeals are kept in abeyance till the disposal of the said Interim Applications by the Tribunal.

JUDGE