- 1 - HC-KAR NC: 2026:KHC:4434-DB WP No. 6617 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH DAY OF JANUARY, 2026 PRESENT THE HON'BLE MR. JUSTICE D K SINGH AND THE HON'BLE MR. JUSTICE S RACHAIAH WRIT PETITION NO. 6617 OF 2023 (L-PF) BETWEEN: 1. THE REGIONAL PROVIDENT FUND COMMISSIONER BHAVISHYANIDHI BHAVAN, NO.13, RAJA RAM MOHAN ROY ROAD, BENGALURU – 560 025. …PETITIONER (BY SRI. SHWETHA ANAND, ADVOCATE) AND: 1. M/S CANBANK FINANCIAL SERVICES LTD., SRI UDAY SHANBHAG, REPRESENTED BY GROUP EXECUTIVE, NO.14, NAVEEN COMPLEX, Digitally signed by SREEDHARAN BANGALORE SUSHMA LAKSHMI Location: High Court of Karnataka - 2 - HC-KAR NC: 2026:KHC:4434-DB WP No. 6617 of 2023 6TH FLOOR, M.G.ROAD, BANGALORE – 560 001. …RESPONDENT (BY SRI. K VIJENDRA, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT IN THE NATURE OF CERTIORARI OR ANY OTHER APPROPRIATE WRIT QUASHING THE PORTION OF THE IMPUGNED ORDER OF THE HON’BLE CENTRAL GOVERNMENT INDUSTRIAL TRIBUNAL-CUM-LABOUR COURT DATED 7TH DECEMBER 2020 PASSED IN APPEAL No. 543/2017 THEREBY MODIFYING THE ORDER DATED 12.12.2002 ON THE FILE No. KN/PF/RO/BNG/PD/1410/13181/02-03 AS PER ANNEXURE-A AND ETC., THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE D K SINGH and HON'BLE MR. JUSTICE S RACHAIAH - 3 - HC-KAR NC: 2026:KHC:4434-DB WP No. 6617 of 2023 ORAL ORDER (PER: HON'BLE MR. JUSTICE D K SINGH) 1. Heard Smt.Swetha Anand, learned counsel for the petitioner/ Regional Provident Fund Commissioner and Sri.K.Vijendra for the respondent company. 2. The present petition has been filed by the Regional Provident Fund Commissioner (hereinafter referred as ‘RPFC’) impugning the order dated 07.12.2020 passed by the Central Government Industrial Tribunal-Cum-Labour Court, Bengaluru (hereinafter referred as ‘CGIT’) in EPF No.543/2017, whereby the CGIT has modified the order dated 12.12.2002 passed by the RPFC levying damages for the delayed payment of EPF contribution and non- compliance of Section 14-B of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred as ‘EPF Act’) for the period of July, 1990 to August, 1997, thereby reducing the same by 50% and directing the respondent to deposit Rs.9,83,500/- as against Rs.19,66,985/-, the quantum of amount of the damages assessed by the RPFC. - 4 - HC-KAR NC: 2026:KHC:4434-DB WP No. 6617 of 2023 3. The RPFC, Bengaluru by the order dated 12.12.2002 imposed the penalty of damages of Rs.19,66,985/- under Section 14-B of the EPF Act on delayed payment of provident fund contribution for the period June, 1997 to July, 1997 on the respondent company. 4. The damages in the nature of penalty were levied after a lapse of 5 years, the matter was sub-judice till 04.07.1997. Thereafter, the respondent company was permitted to seek exemption, consequent upon which the respondent filed an application seeking exemption, which was refused. On its refusal, promptly the respondent had paid the PF contribution and interest of Rs.19,90,000/- within the stipulated time. 5. The levy of damages was contested by filing an appeal before the CGIT. The learned Tribunal, after considering the provisions of Section 14-B of the EPF Act, noted that the matter was sub-judice for a long time between 16.09.1993 to 01.04.1997 and thereafter until the prayer of the respondent company to exempt the establishment under Section 17 of the EPF Act was considered by the - 5 - HC-KAR NC: 2026:KHC:4434-DB WP No. 6617 of 2023 RPFC by the order dated 02.09.1997. The CGIT, relying on the judgment of the Hon'ble Supreme Court in the case of Mcleod Russel India Ltd. v. Regional Provident Fund Commissioner, Jalpaiguri and others1 held that there should be mens rea for avoiding payment of the EPF contribution. In the present case, as soon as the application for exemption was refused, the respondent had deposited the EPF contribution. It was also held that there was nothing to disclose that how the damages have been calculated to be Rs.19,19,000/-. 6. The CGIT also took note of para-32A of the EPF scheme, which prescribes the rates of damages on the percentage of arrears of EPF contributions. For delay of less than 2 months it is 5%, for 2 months to 4 months it is 10%, for 4 months upto 6 months it is 15%, for 6 months and above it is 25%. The Tribunal held that the word ‘may’ appearing in Section 14-B would disclose that the penalty in damages is not mandatory but discretionary, depending on the facts and circumstances of the case. 1 (2014) 15 SCC 263 - 6 - HC-KAR NC: 2026:KHC:4434-DB WP No. 6617 of 2023 The Commissioner has discretion either to reduce or to waive the damages. Thus, the Tribunal exercising its jurisdiction under Section 7-L of the EPF Act reduced the damages by 50%, which would come to Rs.9,83,492.50/. 7. Smt. Swetha Anand, learned counsel for the petitioner/ Provident Fund Commissioner has vehemently submitted that, Section 14-B prescribes that the damages not exceeding the amount of arrears may be recovered, as may be specified in the scheme. Once the rates have been specified in the scheme for recovery of the damages, the Commissioner or the CGIT will not have the power to reduce the said damages as same have been statutorily notified in the scheme. 8. We find some substance in the submission advanced by learned counsel for the Provident Fund Commissioner that the penalty cannot be reduced than prescribed under the scheme. The scheme prescribes a maximum penalty of 25% for the delayed contribution of the EPF fund by an employer. Here, the amount of arrears which was belatedly deposited by the employer/respondent was - 7 - HC-KAR NC: 2026:KHC:4434-DB WP No. 6617 of 2023 Rs.50,62,000/-. Therefore, the maximum penalty could have been 25% of the same, which would come around Rs.12,65,500/-. Therefore, there is no justification for imposing the penalty of Rs.19,66,985/-. Thus, the respondent is entitled for refund of the excess amount levied as penalty and we direct the petitioner to refund the excess amount collected from the respondent within the period of four weeks with interest at 12% from the date of deposit till date of refund. With the aforesaid observation, the writ petition stands disposed of. Sd/- (D K SINGH) JUDGE Sd/- (S RACHAIAH) JUDGE UN List No.: 1 Sl No.: 27