Default or delay in depositing EPF contribution to incur damages: SC

The Supreme Court has said that any default or delay in payment of contribution by the employer in Employees Provident Fund would incur damages under the law, notwithstanding absence of any criminal intent or act behind it.

"Any default or delay in the payment of EPF contribution is a sine qua non for imposition of levy of damages. 'Mens rea' (criminal intent) or 'actus reus' (act of criminal nature) is not an essential element for imposing penalty or damages for breach of civil obligations or liabilities," a bench of Justices M R Shah and B V Nagarathna said.

The top court dismissed an appeal filed by Horriculture Experiment Station Gonikoppal, Coorg against the Karnataka High Court's judgement which had upheld decision of the Regional Provident Fund Commissioner for recovery of damages for having failed to comply with the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952.

The appellant contended that the element of mens rea or actus reus is one of the essential elements which has not been taken note of by the authority while imposing damages in the case.

In its January 23, judgement, the court, however, said the appellant was covered under the provisions of the law but failed to comply with its mandate. Absence of criminal intent or conduct was not required to impose damages for civil proceedings, it said.

Further, the court pointed out, "The 1952 Act is a legislation for providing social security to the employees working in any establishment and engaging 20 or more persons on any day and casts an obligation upon the employer to make compulsory deduction for provident fund and to deposit in the workers account in the EPF office."

"Similar is the provision which is pari materia (of the same subject) to recover damages under Section 85B of the Employees State Insurance Act, 1948 providing insurance and pensionary benefits to the employees," the bench added.

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