Supreme Court of India· 09 September 2026
Does discretion under Section 14B of the EPF & MP Act, on whether to levy damages at all and not merely on their quantum, survive its 1988 amendment?
M/s Kerala Industrial Infrastructure Development Corporation v. Central Board of Trustees and Anr
2026 INSC 990 · Civil Appeal No.7724 of 2023
Coram: Justice J. B. Pardiwala · Justice K. Vinod Chandran
Answer
Discretion under Section 14B on whether to levy damages at all, not merely on their quantum, survives the 1988 amendment.
Yes. Discretion under Section 14B on whether to levy damages at all, not merely on their quantum, survives the 1988 amendment. Though the words changed from 'may recover such damages' to 'may recover by way of penalty such damages, as may be specified in the Scheme', the word 'may' still leaves it open to the Authorized Officer to decide whether any penalty should be imposed at all — only the quantum, once imposed, is fixed by the Scheme. A coordinate Bench's contrary view, that imposition is automatic on proof of default, is doubted and the question is referred to a larger Bench.
Headnote
EPF & MP Act, 1952 — s.14B — s.7Q — s.11B — s.11(2) — SARFAESI Act, 2002 — Recovery of damages — Discretion to levy penalty — First charge — Reference to larger Bench —
EPF & MP Act, 1952 — s.14B — Discretion to levy penalty —
Held: Discretion under Section 14B on whether to levy damages at all, not merely on their quantum, survives the 1988 amendment. A coordinate Bench's contrary view that imposition is automatic is doubted and referred to a larger Bench. (¶14, 16)
EPF & MP Act, 1952 — s.11(2) — SARFAESI Act, 2002 — First charge prevails —
Held further: A first charge under Section 11(2) of the EPF & MP Act overrides the priority conferred by Sections 35, 13 and 26-E of the SARFAESI Act. A mere priority cannot prevail over a first charge. (¶3)
EPF & MP Act, 1952 — s.11B — Waiver of damages, sick industrial company —
Held further: The Central Board's power under the Second Proviso to Section 11B to waive or reduce damages survives the repeal of SICA. It may extend to a Resolution Plan under the Insolvency and Bankruptcy Code akin to a BIFR rehabilitation scheme. (¶6)
EPF & MP Act — s.7Q — Reference to larger Bench —
Held further: Pending the larger Bench's ruling, the appellants shall pay the EPF & MP Act dues with Section 7Q interest in four quarterly instalments, without prejudice to seeking waiver from the Central Board. The matter stands referred to a larger Bench. (¶17, 19)
Headnote
You've used your free headnotes this month
The answer above and the Court's own paragraphs stay free. LexStreak's full headnote on this judgment needs an account — a free one opens it again.
Create my free accountIn the Court's own words
Paragraph 13Further change brought in by the amendment was that pre-amendment, penalty was not to exceed the amount of arrears, but after amendment, though, the rigour of not exceeding the amount of arrears was retained, the quantum leviable was as specified in the Scheme, which was prescribed under the scheme by Paragraph 32A, which is also extracted hereunder: ‘32A. Recovery of damages for default in payment of any contribution:-(1) Where an employer makes default in the payment of any contribution to the fund, or in the transfer of accumulations required to be transferred by him under sub-section (2) of section 15 or sub-section (5) of Section 17 of the Act or in the payment of any charges payable under any other provisions of the Act or Scheme or under any of the conditions specified under Section 17 of the Act, the Central Provident Fund Commissioner or such officer as may be authorised by the Central Government, by notification in the Official Gazette in this behalf, may recover from the employer by way of penalty, damages at the rates given below: Period of Default Rates of damages (0% of arrears per annum) (a) Less than two months 17 (b) Two months and above 22 but less than four months (c) Four months and above 27 but less than six months (d) Six months and above 37’
Paragraph 14Here, we have to pertinently observe that the words employed under the amended Section 14B, is to the effect that the Commissioner or the Authorized Officer, ‘may recover’ by way of penalty such damages. Hence, the discretion is still left with the authority to decide as to whether there should be an imposition of penatly at all. If the Authorized Officer is satisfied that the imposition of penalty has to be made in the facts and circumstances, then the levy shall be under the scheme; which alone is outside the discretion of the authority.
Paragraph 16We are, hence, in doubt of the proposition laid down in Horticulture Experiment Station Gonikoppal[^7] by a Co-ordinate Bench; with due respect to the learned Judges. While directing the deposit of the dues as computed under the EPF & MP Act including that levied under Section 7Q of that Act, we refer the question as to whether there is a discretion under Section 14B on the Authorized Officer to levy or not to levy the penalty.
Acts & Sections
s.14B Employees' Provident Funds and Miscellaneous Provisions Act, 1952s.7Q Employees' Provident Funds and Miscellaneous Provisions Act, 1952s.11B Employees' Provident Funds and Miscellaneous Provisions Act, 1952s.11(2) Employees' Provident Funds and Miscellaneous Provisions Act, 1952s.35 SARFAESI Act, 2002s.13 SARFAESI Act, 2002s.26-E SARFAESI Act, 2002s.53(1) Insolvency and Bankruptcy Code, 2016s.36(4)(b)(iii) Insolvency and Bankruptcy Code, 2016s.30(2)(e) Insolvency and Bankruptcy Code, 2016s.4 Sick Industrial Companies (Special Provisions) Act, 1985One judgment a day. That's the whole habit.
Read the full text of M/s Kerala Industrial Infrastructure Development Corporation v. Central Board of Trustees and Anr — and get the Supreme Court's output as a five-minute daily read, with plain-language headnotes and the questions each judgment settles.
Create my free accountFree forever plan · 30 seconds · data stays in India
Open the full judgment →