- 1 - HC-KAR NC: 2025:KHC-D:11981 WP No. 66095 of 2011 IN THE HIGH COURT OF KARNATAKA, AT DHARWAD DATED THIS THE 12TH DAY OF SEPTEMBER 2025 BEFORE THE HON'BLE MR. JUSTICE C.M. POONACHA WRIT PETITION NO. 66095 OF 2011 (L-PF) BETWEEN: KARNATAKA MINERALS & MANUFACTURING COMPANY LIMITED, ROOM NO.1, G.E.F. MEDICAL ADMINISTRATIVE BLOCK, NEW BEL ROAD, MSRIT POST, BANGALORE-560054, REPRESENTED BY ITS MANAGING DIRECTOR M.R. SEETAARAM (PRESENT M.D.) …PETITIONER (BY SRI. RAVI HEGDE, ADVOCATE) AND: ASSISTANT PROVIDENT FUND COMMISSIONER, OIC, E.P.F. ORGANISATION, SUB-REGIONAL OFFICE, III FLOOR, SLV TOWERS, PARVATHINAGAR, BELLARY-580103. …RESPONDENT (BY SRI. P.V. GUNJAL, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE WRIT OF CERTIORARI OR ANY OTHER WRIT OR ORDER QUASHING THE ORDER PASSED BY THE EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL, NEW DELHI IN ATA.NO.260(6)2005 DATED 06/12/2010, VIDE ANNEXURE-D; CONSEQUENT UPON QUASHING THE ORDER ALLOW THE APPEAL FILED BEFORE THE EMPLOYEES PROVIDENT FUND TRIBUNAL AND REFUND THE AMOUNT DEPOSITED IN TERMS OF INTERIM ORDER OF THE TRIBUNAL BY THE PETITIONER ON 28/04/2006 BEFORE THE RESPONDENT AND ETC. YASHAVANT NARAYANKAR Digitally signed by YASHAVANT NARAYANKAR Location: HIGHCOURT OF KARNATAKA DHARWAD BENCH DHARWAD - 2 - HC-KAR NC: 2025:KHC-D:11981 WP No. 66095 of 2011 THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, THE ORDER WAS MADE THEREIN AS UNDER: CORAM: THE HON'BLE MR. JUSTICE C.M. POONACHA ORAL ORDER The present writ petition is filed seeking the following reliefs: i. issue writ of certiorari or any other writ or order quashing the order passed by the Employees Provident Fund Appellate Tribunal, New Delhi in ATA.No.260(6)2005 dated 06/12/2010, vide Annexure-D; ii. consequent upon quashing the order allow the appeal filed before the Employees Provident Fund Tribunal and refund the amount deposited in terms of interim order of the Tribunal by the Petitioner on 28/04/2006 before the Respondent and iii. issue any other writ or order or direction as this Hon’ble Court may deem fit in the circumstances of the case including the cost of this writ petition. - 3 - HC-KAR NC: 2025:KHC-D:11981 WP No. 66095 of 2011 2. The relevant facts in nutshell leading to the present writ petition are that the petitioner was a public limited company set up at Hosadurga Taluk, Chitradurga District, which was notified as a backward area in industrialization during the year 1979. The petitioner was engaged in the business of manufacturing cement. Despite various attempts, the petitioner faced various problems in its functioning, resulting in the business of the petitioner being unviable. As a result of the same, proceedings before the Board for Industrial and Financial Reconstruction1 was commenced in accordance with the provisions of the Sick Industrial Companies (Special Provisions) Act, 19852 and vide order dated 12.07.1988 passed in Case No.43/1988, the BIFR declared the petitioner/company as a ‘sick company’ as contemplated under Section 3(1) of the SICA. It is further the case of the petitioner that a rehabilitation scheme was sanctioned on 06.10.1991 and the company restarted its operation. However, it once again faced problems in the business carried out by it and due to various factors the company closed 1 Hereinafter referred to as ‘BIFR’ 2 Hereinafter referred to as ‘SICA’ - 4 - HC-KAR NC: 2025:KHC-D:11981 WP No. 66095 of 2011 down permanently w.e.f. 01.10.1997. That, the protection as granted by the Provident Fund Authorities, having regard to the fact that the petitioner was a sick company, lapsed on 31.12.1988. The Provident Fund dues were paid for the period covering from March-1997 to August-1999. That, the company was facing severe financial constraints and that the salary of various personnel of the company was paid by the Managing Director from his personal funds since the company had no funds. 3. It is the further case of the petitioner that the provident fund dues together with interest has been paid. However, the respondent-Assistant Provident Fund Commissioner3 vide proceedings bearing No. KN / PF / SRO / BL/ ENF/ PD/ 13038/ 622/ 2004 dated 09 /16.02.2005 initiated under Section 14-B (erroneously mentioned as 44B in proceedings before the Commissioner) of the Employees' Provident Fund and Miscellaneous Provisions Act, 19524 has levied damages in a total sum of ₹ 9,89,049/-. It is further 3 Hereinafter for short ‘Commissioner’ 4 Hereinafter for short ’PF Act’ - 5 - HC-KAR NC: 2025:KHC-D:11981 WP No. 66095 of 2011 forthcoming that being aggrieved by the said order dated 14/16.2.2005, the petitioner preferred an appeal in ATA No.260(6)2005 under Section 7-i of the PF Act before the Appellate Tribunal. That as per the preconditions required for filing an appeal, the petitioner has deposited 40% of the amount due i.e.₹4,47,120/- before the Appellate Tribunal. The Appellate Tribunal vide order dated 06.12.2010 dismissed the appeal. Being aggrieved, the present writ petition is filed. 4. The learned counsel for the petitioner submits that the petitioner was declared as a sick company by the BIFR in the proceedings conducted under the SICA Act and even the salaries of the personnel of the company has been paid by the Managing Director from his personal funds as a gesture of goodwill. It is further submitted that despite the severe financial constraints faced by the petitioner, the petitioner has paid the provident fund dues together with the interest. Hence learned counsel for the petitioner placing reliance on the decision of a co-ordinate bench of - 6 - HC-KAR NC: 2025:KHC-D:11981 WP No. 66095 of 2011 this Court in the case of M/s Dandeli Ferro Private Ltd. Vs. The Central Board of Trustees and others5 seeks for 100% waiver of the damages levied and for refund of 40% of the amount deposited by the petitioner before the appellate tribunal. 5. Per contra, the learned counsel for the respondent vehemently opposing the submission made on behalf of the petitioner submits that the request made by the petitioner before the respondent-authority has been adequately considered by the Appellate Tribunal, which has dismissed the appeal of the petitioner, which order ought not to be interfered with by this Court in the present writ petition. 6. The submissions made by the learned counsels have been considered and the material on record has been perused. 7. The relevant factual matrix in as much as the petitioner having been declared as a sick company by the 5 WP No.30863/2008 - 7 - HC-KAR NC: 2025:KHC-D:11981 WP No. 66095 of 2011 BIFR under the provisions of SICA as noticed above, has also the fact that the provident fund dues together with the interest has been paid is undisputed. It is further forthcoming from the record that the petitioner has deposited 40% of the damages that has been quantified by the respondent i.e., a sum of ₹ 4,47,120/- vide demand draft bearing No.49552 dated 28.04.2006 before the Appellate Authority as is forthcoming from the letter dated 04.05.2006(Annexure-C to the writ petition). A photocopy of the demand draft is also placed on the record along with Annexure-C to the writ petition. 8. It is further forthcoming from a copy of the Order dated 14/16.2.2005 passed by the respondent which has been placed on record along with a memo by the learned counsel for the petitioner that in the proceedings conducted by the respondent under Section 14-B of the PF Act, with regard to the damages payable, the representative of the petitioner appeared on 09.02.2005 before the respondent and placed on record that there was a discrepancy in the - 8 - HC-KAR NC: 2025:KHC-D:11981 WP No. 66095 of 2011 dates of remittance for the months of August-1996, November-1996 December- 1996, October, November and December-1999 and January-2000 and the copies of the challans were produced. It was further noticed that the petitioner was not functioning during 1987 to 1991 and that the BIFR ordered for winding up of the petitioner and that the petitioner-company was purchased by M/s.Madras Cements on 25.08.1999 without liability. It was also noticed that the Managing Director paid the salary of the personnel of the petitioner from his own funds as a gesture of goodwill. 9. The respondent considering the relevant fact situation has noticed that PF Act is a measure of social security and the Provident Fund organization is the social security organization, which has got the liability to credit the interest to the members from the due dates irrespective of the date of remittance made by the employer. It has also been noticed that due to delay in remittance, the fund has lost interest which it could have otherwise earned had the - 9 - HC-KAR NC: 2025:KHC-D:11981 WP No. 66095 of 2011 amount been remitted in time. Hence, the respondent has justified its decision to levy damages in a sum of Rs.9,89,049/-. 10. The Appellate Tribunal, while considering the appeal of the petitioner, has record a finding that “labour unrest and financial problems are common phenomena in every industrial establishment.” By noticing the same, the appellate tribunal had placed reliance on various judgments and dismissed the appeal. 11. It is clearly forthcoming that the reliance placed by the Appellate Tribunal on the judgment of the Hon'ble Supreme Court in the case of R.P.F. Commr vs K.T. Rolling Mills Pvt.,6 and Organo Chemical Industries & Anr vs Union Of India & Ors7 were rendered in a different fact situation. 12. It is further pertinent to note that a co-ordinate Bench of this Court in the case of M/s Dandeli Ferro Private Ltd.,5 while considering the aspect of waiver of 6 1995 1 SCC 181 7 1977 4 SCC 573 - 10 - HC-KAR NC: 2025:KHC-D:11981 WP No. 66095 of 2011 damages, after noticing the observations made by the BIFR, in the facts of the said case, has waived the entire amount of damages levied, that is to the extent of 100%. 13. 13. In the facts of the present case, having regard to the fact that the petitioner was also declared as a sick company by the BIFR, as has been noticed above, keeping in mind the fact that 40% of the damages levied has already been deposited, it is just and proper that the damages levied on the balance 60% be waived and the respondent be permitted to withdraw the amount deposited by the petitioner before the appellate tribunal. 14. Although, it is the vehement contention of learned counsel for the respondent that there is no basis to waive the 60% damages, having regard to the financial situation of the petitioner as has been noticed above, as also the fact that petitioner has already deposited 40% of the damages, keeping in mind the judgment of this Court in the case of M/s Dandeli Ferro Private Ltd.,5 it is just and proper that the 60% of the damages be waived. - 11 - HC-KAR NC: 2025:KHC-D:11981 WP No. 66095 of 2011 15. In this context, it is also pertinent to note that although the petitioner has set out in his memorandum of appeal before the Appellate Authority, the various circumstances which had led to the petitioner being declared as a sick unit by the BIFR, as also the fact that the entire amount of provident fund together with interest has been paid, the said aspect of the matter has not been adequately considered by the Appellate Tribunal. 16. In view of the aforementioned, the following: ORDER i) The writ petition is partly allowed; ii) The order dated 06.12.2010 passed in ATA No.260(6)/2005 passed by the Employees Provident Fund Tribunal, New Delhi is set aside; iii) The order bearing No.KN/PF/SRO/BL /ENF/PD/13038/622/2004 dated 9/16.02.2005 passed by the respondent levying damages of ₹.9,89,049/- is modified by restricting the damages levied to the amount deposited by the petitioner before the Appellate tribunal i.e. ₹ 4,47,120/- being 40% of the amount; - 12 - HC-KAR NC: 2025:KHC-D:11981 WP No. 66095 of 2011 iv) The respondent shall be liberty to withdraw the said deposit amount of Rs.4,47,120/-(together with accrued interest if any) and appropriate the same to the damages levied by order bearing No. KN/PF/SRO/BL/ENF/PD/13038/ 622/2004 dated 9/16.02.2005; v) In view of the fact that the damages levied by respondent in respect of petitioner has been modified as noted above. The notice No.KN/SRO/BLR/1038/2011-12/155 dated 27.01.2011 issued by the Employees Provident Fund Tribuanl, New Delhi i.e., Commissioner / Recovery Officer, Sub-Regional Officer, Bellary vide Annexure-E to the writ petition is hereby quashed. Sd/- (C.M. POONACHA) JUDGE YAN- upto para 2 HMB-para 3 to end CT-MCK List No.: 1 Sl No.: 4