Employees Provident Fund Act | EPFO Cannot Issue Prohibitory Order U/S 8-F Without Prior Notice To Debtor: Bombay High Court

The Bombay High Court held that the Employees Provident Fund Organisation cannot issue a prohibitory order under Section 8-F of the Employees Provident Funds and Miscellaneous Provisions Act, 1952, without first issuing a notice to the debtor of the employer and giving an opportunity to file a statement on oath, as mandated under Section 8-F(3)(i) and (vi). The Court observed that the impugned order was passed in complete violation of the statutory scheme and principles of natural justice.Justice N.J. Jamadar was hearing a petition filed by B.T. Kadlag Constructions challenging a prohibitory order dated 22 August 2025 issued by the Assistant Provident Fund Commissioner. The property of Respondent No. 2 had been taken over by the Nashik District Central Cooperative Bank under the SARFAESI Act due to loan defaults, and in 2023, the Bank leased the factory to the petitioner, who thereafter began paying lease rentals directly to the Bank. While recovering provident fund dues from the previous management, the EPFO, without issuing any notice under Section 8-F(3)(i), treated the petitioner as a “debtor” of the employer (Respondent no. 2) and passed the impugned prohibitory order restraining lease payments and directing that amounts be diverted towards PF arrears. The Court noted that under Section 8-B of the EPF Act,1952, the Recovery Officer is empowered to recover the amount by attachment and sale of the property, arrest and detention of the employer, and appointment of the Receiver for the management of the movable or immovable properties of the employer. The Court conceded that Sub-Section (2) of Section 8-F of the EPF Act, 1952, empowers the Provident Fund Commissioner to require the debtor of the employer to deduct from the amount due to the employer. However, it highlighted the procedure required to be followed. The Court held that under Section 8-F(3)(i), the EPFO must issue a notice to the debtor of the employer; under clause (vi), the debtor is entitled to object through a statement on oath. The Court found that no such notice had ever been issued, nor was any opportunity to object provided. “… Respondent No.1 has straightaway issued the prohibitory order to the debtor of the employer not to pay the amount due to the employer and instead credit the same with the Provident Fund Commissioner without given a notice as envisaged by Clause (i) of sub-Section (3) of Section 8-F and also without providing an opportunity to meet the said demand by filing a statement on oath under Clause (vi) of sub-Section (3) of Section 8-F,” the Court observed.The Court remarked that merely giving reference to the provisions contained in Section 8-B and 17-B of the EPF Act, 1952, without following the procedure prescribed under Section 8-F of the EPF Act, 1952, would not lend legality and validity to the prohibitory order.Accordingly, the High Court quashed the prohibitory order, but treated it as a notice under Section 8-F(3)(i), permitting the petitioner to file a statement on oath within three weeks. Case Title: B.T. Kadlag Constructions v. Employees Provident Fund Organisation & Ors. [WRIT PETITION NO. 12754 OF 2025]Click Here To Read/Download Order

Employees Provident Fund Act | EPFO Cannot Issue Prohibitory Order U/S 8-F Without Prior Notice To Debtor: Bombay High Court

Saksham Vaishya

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