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TMI Blog2022 (3) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... sputed facts culled out from the record are that the establishment of the appellant(s) is covered under the provisions of the Act 1952. On 31st December, 1974, under Code no.KN/8573 under scheduled head "Fruit Orchards", the appellant(s) failed to comply with the provisions of Act 1952 from 1st January, 1975 to 31st October, 1988. For non-compliance of the mandate of Act 1952, proceedings were initiated under Section 7A and dues towards contribution of EPF for the intervening period of 1st January, 1975 to 31st October, 1988 amounting to Rs. 74,288/- were assessed by the competent authority and after adjudication, that was paid by the appellant to the office of EPF. Thereafter, the authorities issued a notice under Section 14B of the Act 1952 to charge damages for the delayed payment of provident fund amount which was levied for the period January 1978 to September, 1988 and called upon the appellant(s) to pay damages of Rs. 85,548/-. The High Court under the impugned judgment held that once the default in payment of contribution is admitted, the damages as being envisaged under Section 14B of the Act 1952 are consequential and the employer is under an obligation to pay the damages ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d counsel for the appellant(s) submits that the justification tendered by the appellant(s) for which the contribution of EPF could not have been deposited has not been looked into by the authority and 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 under Section 14B of the Act 1952. In support of his submissions, counsel for the appellant(s) has placed reliance on the judgments of this Court in Employees State Insurance Corporation v. HMT Ltd. and another (2008) 3 SCC 35, Mcleod Russell India Ltd. v. Regional Provident Fund Commissioner, Jalpaiguri and others (2014) 15 SCC 263 and Assistant Provident Fund Commissioner, EPFO and another v. The Management of RSL Textiles India Private Limited through its Director (2017) 3 SCC 110. 8. Per contra, learned counsel for the respondent(s) in support of submissions, submitted that mens rea is not an essential element for imposing penalty for breach of civil obligations or liabilities and mere contravention of the provisions of the Act or default in making compliance of the mandate of law as regards the civil liabilities are concerned, mens rea o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing penalty for breach of civil obligations or liabilities. Relevant paras 33 and 35 of the judgment are reproduced as under: "33. This Court in a catena of decisions has held that mens rea is not an essential element for imposing penalty for breach of civil obligations: (a) Director of Enforcement v. MCTM Corpn. (P) Ltd. [(1996) 2 SCC 471 "8. It is thus the breach of a 'civil obligation' which attracts 'penalty' under Section 23(1)(a), FERA, 1947 and a finding that the delinquent has contravened the provisions of Section 10, FERA, 1947 that would immediately attract the levy of 'penalty' under Section 23, irrespective of the fact whether the contravention was made by the defaulter with any 'guilty intention' or not. Therefore, unlike in a criminal case, where it is essential for the 'prosecution' to establish that the 'accused' had the necessary guilty intention or in other words the requisite 'mens rea' to commit the alleged offence with which he is charged before recording his conviction, the obligation on the part of the Directorate of Enforcement, in cases of contravention of the provisions of Section 10 of FERA, would be discharged where it is shown that the 'blamewo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e strict statutory offences for which establishment of mens rea is not an essential ingredient. The omission or commission of the statutory breach is itself the offence. Similar type of offences based on the principle of strict liability, which means liability without fault or mens rea, exist in many statutes relating to economic crimes as well as in laws concerning the industry, food adulteration, prevention of pollution, etc. in India and abroad. 'Absolute offences' are not criminal offences in any real sense but acts which are prohibited in the interest of welfare of the public and the prohibition is backed by sanction of penalty." (c) R.S. Joshi v. Ajit Mills Ltd. (1977) 4 SCC 98 "Even here we may reject the notion that a penalty or a punishment cannot be cast in the form of an absolute or no-fault liability but must be preceded by mens rea. The classical view that 'no mens rea, no crime' has long ago been eroded and several laws in India and abroad, especially regarding economic crimes and departmental penalties, have created severe punishments even where the offences have been defined to exclude mens rea. Therefore, the contention that Section 37(1) fastens a heavy liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition of penalty upon the appellant would, thus, be a forgone conclusion. Only in the criminal proceedings initiated against the appellants, existence of mens rea on the part of the appellants will come up for consideration." (f) SEBI v. Cabot International Capital Corpn. (2005) 123 Comp Cas 841 (Bom) "47. Thus, the following extracted principles are summarised: (A) Mens rea is an essential or sine qua non for criminal offence. (B) A straitjacket formula of mens rea cannot be blindly followed in each and every case. The scheme of a particular statute may be diluted in a given case. (C) If, from the scheme, object and words used in the statute, it appears that the proceedings for imposition of the penalty are adjudicatory in nature, in contradistinction to criminal or quasi-criminal proceedings, the determination is of the breach of the civil obligation by the offender. The word 'penalty' by itself will not be determinative to conclude the nature of proceedings being criminal or quasi-criminal. The relevant considerations being the nature of the functions being discharged by the authority and the determination of the liability of the contravenor and the delinquency. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the provisions is a civil liability is concerned, mens rea or actus reus is not an essential element for imposing civil penalties and overruled the two-Judge Bench judgment in Dilip N. Shroff v. Joint Commissioner of Income Tax, Mumbai and Another (2007) 6 SCC 329 and approved the view expressed by a two-Judge Bench of this Court in Chairman, SEBI (supra) and held in paras 18 and 20 as under: "18. The Explanations appended to Section 271(1)(c) of the IT Act entirely indicates the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing return. The judgment in Dilip N. Shroff case [(2007) 6 SCC 329] has not considered the effect and relevance of Section 276-C of the IT Act. Object behind enactment of Section 271(1)(c) read with Explanations indicate that the said section has been enacted to provide for a remedy for loss of revenue. The penalty under that provision is a civil liability. Wilful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution under Section 276-C of the IT Act. 20. Above being the position, the plea that Rules 96-ZQ and 96-ZO have a conc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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