Employer Making EPF Contribution Under Central Act Can't Be Compelled To Contribute For Same Employee Under State Act: Jammu & Kashmir High Court

The Jammu & Kashmir High Court has ruled that employers cannot be forced to contribute to the Employees' Provident Fund (EPF) under both the Central Employees Provident Fund Act and the Jammu and Kashmir EPF Act for the same employee. Making duplicate contributions would amount to doubling the liability on the part of the employer, the court emphasised.

The observations we made by a bench of Justice Rajnesh Oswal while hearing a petition challenging a communication issued by the State whereby the petitioner-company was called upon to deposit contributions under the provisions of Jammu and Kashmir EPF Act, 1961, based on some inspection conducted by the Provident Fund Inspector.

The petitioner-company claimed to have obtained registration under the Central Employees Provident Fund Act and Miscellaneous Provisions Act 1952. The company asserted that it regularly deposited EPF contributions for all its 107 employees, including 54 working in the erstwhile State of Jammu and Kashmir.

Assailing the communication the petitioner argued that it was already registered with the EPF Organization, New Delhi, and was making contributions under the Central Act, thus exempting it from the provisions of the Jammu and Kashmir EPF Act, 1961. The petitioner further contended that the services provided by the company did not fall within the purview of the state act and that the communications issued by the respondents violated the principles of natural justice.

Justice Oswal, after considering the arguments presented, observed that the purpose of both the Acts is to provide for the institution of Provident Funds for employees in the factories and other establishments and only the area of the operation of these Acts is different.

“Once the employer is contributing EPF for a particular employee under either of the Acts, then the employer cannot be compelled to make contribution under the other Act, as the employer would then make contribution twice for the same employee”, the bench reasoned.

Deliberating on the contention of the petitioner regarding the violation of principles of natural justice, the court pointed out that the respondents failed to conduct a proper inquiry as mandated by Section 8-A (1) of the Jammu and Kashmir Employees Provident Funds (and Miscellaneous Provisions) Act, 1961. The court noted that the petitioner had provided a detailed reply along with relevant documents, but no inquiry was conducted before issuing the impugned communications.

“The petitioner was directed to implement the Provident Fund Scheme by deducting the Provident Fund contributions from its employees and thereafter, even after the receipt of the reply from the petitioner-company along with relevant documents, no such enquiry was conducted by the respondents and straightway communications impugned were issued. The petitioner-company is right in submitting before this Court, that the petitioner has been condemned unheard”, the court maintained.

As a result of the judgment, the court quashed the impugned communications and directed the respondents to pass a fresh order. The respondents were further directed to consider the contributions made by the petitioner under the Central Act and review the documents submitted.

Case Title: M/s Delton Infra Pvt. Ltd. Vs State of J&K and another

Citation:2023 LiveLaw (JKL) 172

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