Popsco Ltd. is a Company engaged in manufacture and sale of textile goods, falling within the purview of Employees' Provident Fund and Miscellaneous Provisions Act, 1952. The workforce of the Company is around 1000, incl

Section 14 (B) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 provides that where an employer makes default in the payment of any contribution to the Fund the Pension Fund or the Insurance Fund or in the transfer of accumulations required to be transferred by him, the Central Provident Fund Commissioner or such other 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 such damages, not exceeding the amount of arrears, as may be specified in the Scheme. The object of levying damages under Section 14 (B) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 is to penalize wilfull default. Mens rea is an essential ingredient for the levy of damages under Section 14(B) of the Act. For levying damages, the Authority ought to have given a factual finding that the Establishment intentionally and willfully delayed in remitting the contribution. In the given case, when the Regional Provident Fund Commissioner (RPFC) brought to the notice of Popsco Ltd. that the company ought to have remitted the contribution based on their entire pay, the Company not only made good the shortfall in the contribution, but also the interest portion. Therefore, by no stretch of imagination, any prudent authority can come to the conclusion that the company, Popsco Ltd., had willfully short paid the contribution. Mens rea cannot be established in this case. As such, Popsco Ltd. may not be penalized under Section 14 (b) of the Act. ( Loyal Textile Mills Limited v. Regional Provident Fund Commissioner ).