ORDER : 1. The present petition is filed against the impugned order dated 19.02.2010 passed by Presiding Officer, Employees Provident Fund Appellate Tribunal, New Delhi in ATA 509(12) 2006, titled as Rajasthan State Mines and Minerals Ltd. vs. Assistant Provident Fund Commissioner Jaipur and against the order dated 04.08.2006 passed by Assistant Provident Fund Commissioner Jaipur under Section 14B of the Employees Provident Fund and Misc. Provisions Act, 1952. 2. Learned counsel for the petitioner has submitted that the order(s) dated 19.02.2010 and 04.08.2006 have been passed in contravention of the settled position of law and while passing the said orders, the respondents have neither considered the relevant facts of the case nor have they abided by the mandate of the ad rem statutory provisions pertaining to the imposition of penalty by way of damages and the corresponding charges on interest. Hence, the impugned orders are non-est and void ab-initio. 3. In this background, while praying for the quashing of the orders referred herein-above, learned counsel for the petitioner has apprised the Court of the brief and relevant factual matrix of the present petition. It is submitted that the petitioner is an enterprise of the Government of Rajasthan, which is engaged in the mining of rock phosphate, lignite, gypsum, silica and limestone. The petitioner is covered by the mandate of The Employees Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter, ‘Act of 1952’) and the Employee’s Pension Scheme of 1971. However, the provisions of the Act of 1952 were applicable to the petitioner only to the extent that the petitioner is an exempted establishment under Section 17(1)(a) of the Act of 1952. The petitioner-company, with a resolve to benefit its employees, proposed to introduce a pension scheme titled, ‘RSMDC Ltd. Employee’s Pension Regulations, 1994’; in lieu of the Employee’s Pension Scheme of 1971. The Board of Directors of the petitioner-company resolved to implement the said Regulations of 1994 w.e.f. 1.04.1994. Meanwhile, during the period when the said Regulations of 1994 were being finalized, the Central Government, namely the EPF Department introduced the ‘Employee’s Pension Scheme, 1995’. 4. The Board of Directors of the petitioner-company resolved to implement the said Regulations of 1994 w.e.f. 1.04.1994. Meanwhile, during the period when the said Regulations of 1994 were being finalized, the Central Government, namely the EPF Department introduced the ‘Employee’s Pension Scheme, 1995’. 4. At this juncture, it was submitted by the learned counsel for the petitioner that considering the fact that the implementation of the petitioner-company’s Regulations of 1994 was to be carried out w.e.f. 01.04.1994, the petitioner-company entered into a dialogue with the Assistant Provident Fund Commissioner regarding the compliance and modalities for the grant of exemption from the Pension Scheme of 1995, as introduced by the Central Government. Subsequently, taking into account the factum of resistance and unrest from the employees of the petitioner-company qua the Scheme of 1995 and after further considering the fact of the probable implementation of the Regulations of 1994, subject to the examination by the Committee formed by the Board of Directors; the petitioner-company decided to avail the benefit of Paragraph 39 of the Scheme of 1995, which provides establishments exemptions from the operation of the Pension Scheme of 1995. Therefore, relying upon the benefit envisioned in Paragraph 39, the petitioner-company did not make contributions to the pension fund. 5. Thereafter, since there was a delay occurring in the finalization of the Pension Regulations of 1994, which were to take effect from 01.04.1994; vide communication dated 23.12.1996, it was suggested by the P.F. Authorities that the amount of pension contribution be remitted to the pension fund by the petitioner-company and the same would be refunded, subject to the grant of exemption under Paragraph 39 of the Pension Scheme of 1995. In light of the said suggestion, the petitioner-company deposited the due amount on 23.12.1996. Moreover, upon a finalization of the Regulations of 1994, the petitioner-company submitted an application under Paragraph 39 of the Scheme of 1995, for grant of exemption from the Pension Scheme of 1995, in lieu of the Regulations of 1994, as formulated by the petitioner-company. However, vide letter dated 11.04.1997, the said exemption application was rejected on the ground that the Regulations of 1994 were deemed to be less favourable to the employees when juxtaposed with the Pension Scheme of 1995. Thereafter, on 19.02.2003, the erstwhile RSMDC was amalgamated into the petitioner-company. However, vide letter dated 11.04.1997, the said exemption application was rejected on the ground that the Regulations of 1994 were deemed to be less favourable to the employees when juxtaposed with the Pension Scheme of 1995. Thereafter, on 19.02.2003, the erstwhile RSMDC was amalgamated into the petitioner-company. Subsequently, on 28.10.2004, summons were issued under Section 14B of the Act of 1952, in the name of Managing Director (RSMDC) wherein it was inter-alia alleged that the RSMDC had failed to remit the amount of P.F. Contribution charges, within the stipulated due date. In light of the said summons, necessary details/explanation was called from the petitioner-company. On 17.01.2005, a representative of the petitioner-company attended the inquiry conducted against the company and vide letter dated 15.01.2005, apprised the respondents regarding the fact of amalgamation of the companies w.e.f. 20.02.2003 and submitted that the erstwhile RSMDC had been regularly complying with the provisions of the Act and accordingly, submitting its dues. 6. In this background, on 06.06.2006, respondent no.2 issued a letter dated 18.05.2006 along with a statement showing the amount due on part of the petitioner-company under Section 14B of the Act for the period from March 1995 to August 2002, which was quantified to the tune of Rs. 6,09,117/-as damages under Section 14B and interest @ Rs. 21,768/-under Section 7Q of the Act. In response, the petitioner-company submitted its reply vide letter dated 13.07.2006, advancing its bonafides and genuineness in light of the fact that the damages for the period between December 1995 to February 1997 would not be applicable to the petitioner-company on account of the fact that the delay, as made out by the respondents, came into existence on account of the fact that the Pension Regulations of 1994 were not approved by the Regional Provident Fund Commissioner and the application filed under Paragraph 39 was rejected. Therefore, the inadvertent delay was caused under unavoidable circumstances. Hence, it was contended that the intentions of the petitioner-company were bonafide, as is reflected from the fact that when there was a delay on their part in finalizing the Pension Regulations of 1994, the petitioner-company on their own accord, started depositing the statutory contributions in the year 1996. Therefore, the authorities below have passed legally unsustainable order(s), without taking into consideration the bonafide intentions of the petitioner-company and overlooking the relevant facts and circumstances of the case. Therefore, the authorities below have passed legally unsustainable order(s), without taking into consideration the bonafide intentions of the petitioner-company and overlooking the relevant facts and circumstances of the case. Hence, the orders dated 19.02.2010 and 04.08.2006 are liable to be quashed and set aside. 7. Per contra, learned counsel for the respondents has submitted that the impugned order(s) have been passed in accordance with law, after due application of mind and consideration of the relevant facts and law applicable. He has relied upon the judgment of the Hon’ble Apex Court in Civil Appeal No(s). 2136/2012 titled as Horticulture Experiment Station Gonikoppal, Coorg v/s The Regional Provident Fund Organization wherein it was held that any default or delay in the payment of EPF contribution by the employer under the Act is a sine qua non for imposition of levy of damages under Section 14B of the Act of 1952. Furthermore, learned counsel has also submitted that the Hon’ble Apex Court in Horticulture Experiment (Supra) has taken into consideration the three Judge Bench judgment in the case of Union of India & Ors. vs. Dharmendra Textile Processors and Ors. reported in (2008) 13 SCC 369 and has held that mens rea is not an essential element for imposing penalty/damages in civil obligations and liabilities. Lastly, in support of his contentions, learned counsel relied upon Rule 32B of the Employee Provident Funds Scheme 1952, which is reproduced hereinunder:- 32B. Terms and conditions for reduction or waiver of damages:- The Central Board may reduce or waive the damages levied under section 14B of the Act in relation to an establishment specified in the second proviso to section 14B, subject to the following terms and conditions, namely: — (a) in case of a change of management including transfer of the undertaking to workers' co-operative and in case of merger or amalgamation of the sick industrial company with any other industrial company, complete waiver of damages may be allowed; (b) in cases where the Board for Industrial and Financial Reconstruction, for reasons to be recorded in its schemes, in this behalf recommends, waiver of damages up to 100 per cent may be allowed; (c) in other cases, depending on merits, reduction of damages up to 50 per cent may be allowed.” 8. In this regard, learned counsel submitted that in terms of Rule 32B, the petitioner-company falls under the statutory ambit of Sub-rule (c). In this regard, learned counsel submitted that in terms of Rule 32B, the petitioner-company falls under the statutory ambit of Sub-rule (c). Therefore, as per the mandate of the said Rule, it is only the Central Board which, depending upon the merits of a case, can reduce or waive the damages imposed under Section 14B, to an upper limit of 50% only. Hence, after duly taking into consideration the factual matrix of the case and the application of the relevant law, the Appellate Tribunal as well as the Assistant Provident Fund Commissioner have passed well-reasoned orders, strictly in accordance with law. Hence, the present writ petition is liable to be dismissed. 9. This Court has heard the arguments advanced by the learned counsel for the both the sides, scanned the record of the case and perused the judgment(s) cited at Bar. 10. In the case at hand, the following facts warrant germane consideration, for the fair and efficacious adjudication of the matter: 10/1. That the petitioner-company is a State instrumentality, being a Government-Company having 100 per cent equity of the State. 10/2. That the petitioner-company introduced a pension scheme for the benefit of its employees, titled as ‘RSMDC Ltd. Employee’s Pension Regulations, 1994’. However, while the said regulations were being finalized, the Central Government introduced the Employee’s Pension Scheme, 1995. Accordingly, the petitioner-company applied for exemption under Paragraph 39 of the Scheme of 1995, which came to be operational from 16.11.1995. 10/3. That since delay was occurring in the finalization of the Pension Regulations of 1994, which were to take effect from 01.04.1994, it was suggested by the P.F. Authorities that the amount of pension contribution be remitted to the pension fund by the petitioner-company and the same shall be refunded on the grant of exemption from the Scheme of 1995. Accordingly, the amount due was deposited on 23.12.1996, under the belief that the amount will be refunded if the exemption is granted. 10/4. However, the said application for exemption filed under Paragraph 39 of the Scheme of 1995 was rejected on 11.04.1997. 11. On a perusal of the aforementioned facts, it is observed that the petitioner-company had been regularly complying with the provisions of the Act of 1952 and the Schemes applicable thereto and had further been depositing their statutory contributions in a timely manner towards the Pension Scheme. 11. On a perusal of the aforementioned facts, it is observed that the petitioner-company had been regularly complying with the provisions of the Act of 1952 and the Schemes applicable thereto and had further been depositing their statutory contributions in a timely manner towards the Pension Scheme. Moreover, they also co-operated with the Department upon the initiation of inquiry against the petitioner-company under Section 14B of the Act of 1952. The bonafides of the petitioner-company are further established by the fact that when there was a delay in the finalization of the Pension Regulations of 1994, the petitioner-company on their own accord, started depositing their statutory contributions, under the genuine belief that the amount shall be refunded to the company if the exemption, as prayed for under Paragraph 39, is granted. Therefore, in the above background, having established the bonafides of the petitioner-company, the central point of consideration which arises in the instant matter is- “Whether in the light of the provisions of Section 14B of the Act of 1952, the levy and imposition of damages is mandatory or not and whether the same encapsulates the requirement of mens rea on part of the petitioner-company to evade their statutory obligations towards the provident fund or pension scheme as a pre-requisite to such imposition of/damages?” 12. Before adverting to the adjudication of the issue framed herein-above, it would be appropriate for this Court to reproduce the relevant provisions necessary for its due consideration, herein- under: “14B. Before adverting to the adjudication of the issue framed herein-above, it would be appropriate for this Court to reproduce the relevant provisions necessary for its due consideration, herein- under: “14B. Power to recover damages.—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 under subsection (2) of section 15 [or sub-section (5) of section 17] or in the payment of any charges payable under any other provision of this Act or of [any Scheme or Insurance Scheme] or under any of the conditions specified under section 17, [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:] [Provided that before levying and recovering such damages, the employer shall be given a reasonable opportunity of being heard]: [Provided further that the Central Board may reduce or waive the damages levied under this section in relation to an establishment which is a sick industrial company and in respect of which a scheme for rehabilitation has been sanctioned by the Board for Industrial and Financial Reconstruction established under section 4 of the Sick Industrial Companies (Special Provisions) Act, 1985, subject to such terms and conditions as may be specified in the Scheme.] 32B. Terms and conditions for reduction or waiver of damages:- The Central Board “may reduce or waive” the damages levied under section 14B of the Act in relation to an establishment specified in the second proviso to section 14B, subject to the following terms and conditions, namely: — (a) in case of a change of management including transfer of the undertaking to workers' co-operative and in case of merger or amalgamation of the sick industrial company with any other industrial company, complete waiver of damages may be allowed; (b) in cases where the Board for Industrial and Financial Reconstruction, for reasons to be recorded in its schemes, in this behalf recommends, waiver of damages up to 100 per cent may be allowed; (c) in other cases, depending on merits, reduction of damages up to 50 per cent may be allowed.” 13. In a bid to settle the central issue framed herein-above, it is imperative to peruse the judgment cited by the learned counsel for the respondent in the case of Horticulture Experiment (Supra), wherein reliance has also been placed upon the Apex Court decision in Dharmendra Textiles (Supra). While placing reliance upon the said judgment, it has been considerably argued by the respondents that mens rea or actus reus are not essential elements for the imposition of penalty or damages for breach of civil obligations and liabilities. Learned counsel, in particular, placed reliance upon the following extract from the said judgment, which is reproduced below: “15. It may be noticed that Dilip N. Shroff (supra) on which reliance was placed has been overruled by this Court in Union of India and Others v. Dharmendra Textile Processors and others (supra). For the aforesaid reasons, the view expressed by this Court in Employees State Insurance Corporation (supra) may not be binding precedent on the subject and of no assistance to the appellant(s). 17. Taking note of three-Judge Bench judgment of this Court in Union of India and Ors. v. Dharmendra Textile Processors and Ors. (supra), which is indeed binding on us, we are of the considered view that any default or delay in the payment of EPF contribution by the employer under the Act is a sine qua non for imposition of levy of damages Under Section 14B of the Act 1952 and mens rea or actus reus is not an essential element for imposing penalty/damages for breach of civil obligations/liabilities.” 14. On the other hand, in order to set forth and establish the requirement of mens rea on part of an establishment to evade their statutory obligation, thereby warranting the imposition of penalty under Section 14B of the Act of 1952, learned counsel for the petitioner has extensively relied upon the celebrated judgment of the Apex Court in M/s. Hindustan Steel Ltd. vs. The State of Orissa reported in 1970 SCR (1) 753. In particular, emphasis has been laid on the said extract from the said judgment, which is reproduced herein-under: 7. Under the Act penalty may be imposed for failure to register as a dealer : Section 9(1) read with Section 25(1)(a) of the Act. But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. Under the Act penalty may be imposed for failure to register as a dealer : Section 9(1) read with Section 25(1)(a) of the Act. But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. Those in charge of the affairs of the Company in failing to register the Company as a dealer acted in the honest and genuine belief that the Company was not a dealer. Granting that they erred, no case for imposing penalty was made out. 15. Additionally, learned counsel for the petitioner has also placed reliance upon the judgment of the Apex Court in Organo Chemical Industries & Anr. vs. Union of India & Ors.:(1997) 4 SCC 573; Bharat Heavy Vehicles vs. P.F. Commissioner: AIR 1994 SC 1175 and Employees State Insurance Corporation vs. HMT Ltd. reported in AIR 2008 SC 1322 . While placing reliance upon the said judgments, learned counsel for the petitioner has submitted that in situations where there is absence on part of an establishment to deliberately evade their statutory obligations and especially in situations, where the delay so caused was on account of bonafide reasons, the imposition of damages upon the establishment is completely unjustified. While placing reliance upon the said judgments, learned counsel for the petitioner has submitted that in situations where there is absence on part of an establishment to deliberately evade their statutory obligations and especially in situations, where the delay so caused was on account of bonafide reasons, the imposition of damages upon the establishment is completely unjustified. In light of the same, it was also argued that considering the factum of non-establishment of an intentional attempt to evade the payment of the petitioner-company’s statutory dues coupled with the fact of delay caused on account of a bonafide belief arising from the exemption application so filed under Paragraph 39, the imposition of penalty by the concerned authorities was wholly unjustified and misconceived in the eyes of the settled position of the law. 16. Having comprehensively considered the judgments cited by the learned counsel for both the sides on the issue framed hereinabove, it is observed that judgment of the Hon’ble Apex Court rendered in M/s Hindustan Steel (Supra) is squarely applicable to the facts and circumstances of the instant matter. Whereas, the applicability of the judgment(s) cited by the learned counsel for the respondent is not met out in the facts and circumstances of the present case. The holdings in the case of Horticulture Experiment (Supra) and Dharmendra Textiles (Supra) are distinguishable from the facts of the instant case, on the following grounds: 16/1. The ground for delay caused in the payment of the statutory obligations in Horticulture Experiment (Supra) were distinct from the facts and circumstances of the instant matter insofar as the establishment i.e. Horticulture Experiment Station, was not a State instrumentality unlike the petitioner-company. Moreover, contrary to the facts of the present matter qua the deposition of dues by the petitioner-company in the Pension Fund and the factum of the application for exemption filed by them, the Horticulture Experiment Company had neither fulfilled its obligation to deposit monies in the Pension Fund and nor had they applied for an exemption of any sort, which could have inadvertently caused them to fumble in timely paying their dues as required under the Act of 1952 and the corresponding Rules framed therewith. 16/2. 16/2. In the case of Dharmendra Textile (Supra) as relied upon by the Hon’ble Apex Court in Horticulture Experiment (Supra), while considering the provision of Section 11AC of the Central Excise Act, 1944, it was held that the levy of penalty under the said provision was mandatory, as the legislature had used the words “assessee shall be liable” (‘shall’ being the keyword), which leaves no room for discretion on part of the authorities. Furthermore, the provision of Section 11AC encapsulates the inter play of fraud, collusion or any willful misstatement or suppression of facts or contravention of any other provisions of the Act, with an intent to evade the payment of duty. Therefore, in such circumstances, the question of mens rea or intent will not act as a hindrance as the adjudicating authority has not been provided any discretion to levy duty less than what is legally and statutorily leviable. However, in the facts and circumstances of the present case and upon the analysis of Section 14B of the Act of 1952, it is observed that the legislature has used the words “may recover” (‘may’ being the keyword), which leaves ample of room for the authorities to exercise their discretion in imposing the penalty by way of damages. Therefore, in such circumstances, the requirement of mens rea may be incorporated while adjudicating upon the issue of the imposition of damages, subject to the bonafides of the defaulting party. At the same time, Section 14B of the Act of 1952, unlike Section 11AC of Central Excise Act, 1944 does not provide for the presence of fraud, collusion or any willful mis-statement, thereby warranting the mandatory imposition of penalty. Hence, Section 14B provides for discretion to be exercised by the Authorities in assessing a case for the imposition of a penalty. Furthermore, even as per Rule 32B of the Employees Provident Fund Scheme, 1952, the Central Board has been empowered to reduce the damages up to the upper limit of 50%, depending upon the merits of the case; thereby, implying the availability of the discretion to be exercised by the concerned authorities in the imposition of penalty/damages. 16/3. In this regard, reliance is also placed upon the Apex Court judgment in Union of India Vs. 16/3. In this regard, reliance is also placed upon the Apex Court judgment in Union of India Vs. Rajasthan Spinning & Weaving Mills reported in (2009) 13 SCC 448 wherein it was categorically held that the decision in Dharmendra Textile (supra) must be understood to mean that, though the application of Section 11AC would depend upon the existence or otherwise of the conditions expressly stated in the Section, once the Section is applicable in a case, the Authority concerned would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under Sub-section (2) of Section 11A. More importantly, it was also clarified that the decision in Dharmendra Textile (supra) is applicable only insofar as Section 11AC of the Central Excise Act, 1944 is concerned and not other statutory provisions, as provided under the law. It is also pertinent to note that the finding in the judgment of Rajasthan Spinning & Weaving Mills (supra) was not taken into consideration while passing the judgment in the case of Horticulture Experiment (supra), as relied upon by the learned counsel for the respondents. 17. Accordingly, in the case at hand, reliance can be placed upon the judgment of the Hon’ble Apex Court in Hindustan Steel (Supra), wherein the three Judge Bench of the Apex Court held that an order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of the law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. It was further held that penalty will also not be imposed merely because it is lawful to do so. In this regard, it was analyzed that whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty shall be justified in refusing to impose said penalty, if it is satisfied that there was a technical or venial breach of the provisions of the Act or where the said breach flew from the bonafide belief that the offender was not liable to act in the manner as prescribed by the statute. Furthermore, the aforementioned judgment of Hindustan Steel (supra), passed by a Larger Bench, was not considered while passing the judgment in Horticulture Experiment (supra). Therefore, the latter is distinguishable from the facts and circumstances of the instant matter, for the reasons stated herein-above. 18. At the risk of repetition, it is observed that in the facts of the present case, the petitioner-company did not act in a mala fide manner in deliberately trying to disregard their obligations to timely submit their dues towards the Pension Fund, as is reflected from the fact that when there was a delay in the finalization of the Pension Regulations of 1994, the petitioner-company on their own accord, started depositing the statutory contributions. Moreover, the petitioner-company was under the genuine belief that the said amount will be refunded if the exemption, as sought under Paragraph 39, is granted to them. Therefore, it can be conclusively stated that those in charge of the affairs of the Company qua the payment of dues acted in honest and genuine belief that the petitioner-company shall be granted an exemption, as sought for. It is trite that the breach on part of the petitioner-company did not flow from deliberate defiance of the law. Hence, despite granting that they erred, no case for imposing penalty is made out against the petitioner-company. 19. It is noteworthy that all the parts of a statute or section must be construed together and every clause of a section should be construed with reference to the context and other clauses thereof, so that the construction to be put on a particular provision makes a consistent enactment of the whole statute. The words of a provision must be construed with some imagination of the purpose and object of the legislation altogether. Accordingly, the provision of Section 14B explicitly employs the term “may” recover, which when read with the corresponding Rule 32B, further cements the discretion provided to the authorities vide the Act of 1952 and their corresponding Rules, to exercise their discretion in imposing penalty and/or reduce it thereof. 20. Accordingly, the provision of Section 14B explicitly employs the term “may” recover, which when read with the corresponding Rule 32B, further cements the discretion provided to the authorities vide the Act of 1952 and their corresponding Rules, to exercise their discretion in imposing penalty and/or reduce it thereof. 20. Therefore, in light of the observations made herein-above and considering the fact that the delay so caused by the petitioner-company was on account of a bonafide and genuine error, for which a sufficient explanation was thereby provided, this Court deems it just and proper to quash and set aside the order(s) dated 19.02.2010 and 04.08.2006, passed by the Employees Provident Fund Appellate Tribunal and Assistant Provident Fund Commissioner, respectively. Furthermore, in the facts and circumstances of the case, the proceedings initiated under Section 14B of the Act of 1952 are held to be untenable. 21. As a result, the writ petition is allowed. All pending applications shall stand disposed of.