Case: Mcleod Russel India Limited Vs. Reg.Prov.Fund Comm.,Jalpaiguri

3. The factual matrix obtaining in the case at hand, succinctly stated, is that M/s. Mathura Tea Estate, P.O. Mathura Bagan, District Jalpaiguri, West Bengal, owned by Saroda Tea Company Ltd., indubitably an establishment covered by theProvident Funds and Miscellaneous Provisions Act, 1952 (‘the EPFfor brevity), had defaulted in remitting the contributions and accumulations payable under the EPF Act and the sundry Schemes formulated under that statute. It was in those circumstances that the Regional Provident Fund Commissioner (‘RPFfor brevity), Jalpaiguri, West Bengal, had issued notices to M/s. Mathura Tea Estate enabling it to show cause against the imposition ofas envisaged under Section 14B of the EPF Act. M/s. Mathura Tea Estate requested for a waiver of damages, which request came to be rejected on the predication that the said establishment was neither a sick unit nor the subject of any scheme for rehabilitation sanctioned by the Board for Industrial and Financial Reconstruction. In the duration of those proceedings, the management of M/s. Mathura Tea Estate under the erstwhile ownership of Saroda Tea Company Ltd. was taken over by Eveready Industries (India) Ltd, which thereafter discharged the liability of entire principal sum of Provident Fund dues to the tune of Rs.75,76,000/- pertaining to the period prior to the takeover in consonance with the Memorandum of Understanding entered into between it and Saroda Tea Company Ltd. Significantly, the said Memorandum of Understanding also included a clause to the effect that any damages payable for the failure to deposit the dues and accumulations under the EPF Act would be the exclusive liability of Saroda Tea Company Ltd making it palpably evident that the appellant was fully alive to this liability. It is in these premises that Eveready Industries (India) Ltd. undauntedly contended before the RPF Commissioner, Jalpaiguri, in the event in futility, that proceedings under Section 14B of the EPF Act against it were unjustified as it was not thedefined under Section 2(e) of the EPF Act, which defaulted in paying contributions. The RPF Commissioner has recorded that M/s. Mathura Tea Estate had defaulted in payment of dues for the period from March, 1989 to February, 1998, which assertion of fact is not in dispute. It held that on a conjoint reading of Sections 14B and 17B of the EPF Act it was clear that damages under Section 14B were recoverable jointly and severally from Saroda Tea Company Ltd. as well as Eveready Industries (India) Ltd. After tabulating the rates of damages, i.e. percentage of arrears per annum depending on the period of default, damages were assessed at Rs.70,37,950; and it was further directed that failure to deposit penal damages within the stipulated period would attract the provisions of Section 7Q of the EPF Act, thereby enhancing the liability to include simple interest at the rate of 12 per cent per annum on the damages. It was this Order of the RPF Commissioner that failed to find favour with the learned Single Judge of the High Court at Calcutta, who set aside theOrders and directed the said Authority to reconsider the issues within a period of three months. The learned Single Judge had drawn reliance from the ruling reported as The Regional Provident Fund Commissioner, Mangalore vs Karnataka Forest Plantations Corporation Ltd., Bangalore, 2000 (1) LLJ 1134, which had ruled that on an interpretation of Section 17B the transferee employer would be liable to pay all outstanding contributions even for the period preceding the transfer, but it could not be fastened with punitive liability for acts of omission or commission of the previous employer for the period anterior to the transfer. It will bear reiteration that in terms of the judgment of the Division Bench impugned before us, the decision of the learned Single Judge in its own turn was reversed on the application of the dictum of the Special Three-Judge Bench in Dalgaon Agro Industries Ltd.

Court's reasoning:
10. There is no gainsaying that criminal liability remains steadfastly fastened to the actual perpetrator and cannot be transferred by any compact between persons or even by statute. But this incontrovertible legal principle does not support or validate the contention of Mr. Jayant Bhushan, Learned Senior Advocate for the Appellants, that damages levied in terms of Section 14B of the EPF Act cannot be foisted onto his clients. Sections 14, 14A, 14AA, 14AB and 14AC of the EPF Act are the provisions postulating prosecution; in contradistinction Section 14B contemplates the power tofrom the employer by way of penalty such damages, not exceeding the amount of arrears, as may be specified in theIt is true that it is not a river but a mere rivulet that segregates and distinguishes the legal concepts of damages or compensatory damages or exemplary damages or deterrent damages or punitive damages or retributory damages. We shall abjure from writing a dissertation on this compelling legal nodus; save to clarify that modern jurisprudence recognizes that the imposition of punitive damages, quintessentially quasi-criminal in character, can be resorted to even in civil proceedings to deter willful wrongdoing by making an admonished example of the wrongdoer. This is the essential purpose, it seems to us, of Section 14B of the EPF Act, and an imposition within its confines does not assume criminal prosecution so as to stand proscribed insofar as transfer of establishment from one management/employer to its successor is concerned.