EPF Act : Supreme Court To Hear PF Commissioner's Appeal Against Direction To Pay Interest To Federal Bank After 3 Weeks

The Supreme Court on Wednesday adjourned the Special Leave Petition filed by Regional Provident Fund Commissioner challenging the KeralaHigh Court's decision directing the Commissioner to disburse the interest amount( to the tune of over Rs 53 crores) to the Federal Bank for funds retained with the Provident Fund from 1985 to 1992. Appearing for the Regional Provident Fund Commissioner, Advocate Sandeep Jindal sought for adjournment. Accordingly, the division bench of Justices Sanjiv Khanna and Bela M Trivedi in their order noted, "At request of petitioner's counsel, relist after 3 weeks." The special leave petition is filed against the 2016 judgment of a division bench of the Kerala High Court which affirmed the findings of a Single Bench regarding the calculation of interest by applying Para 60 of the scheme (as prescribed by the Central Government for similar payments) from the due date, till realization. Courtroom Exchange Representing the Federal Bank, Senior Advocate Amit Sibal submitted that the Regional Provident Commissioner had withheld the payment of interest on provident fund for 27 years.Justice Sanjiv Khanna, the presiding judge, observed : "Until 1992 there was ambiguity. But after 1992 the Central Government said that it was not covered. Fact of the matter is that the rate of interest which you get in PF is far better than what you get outside. The major challenge raised is with regards to the applicability of 'Para 60' of the Scheme and the liability to satisfy interest on the due amount fails. That's the grey area". "We had in anticipation of being outside the scheme, started EPF which had a similar rate of interest which was approved by the Central Government. However the trust (Federal Bank Employees Provident Fund Trust) which was formed for PF Contributions was emptied", Sibal submitted. Justice Khanna at this juncture asked Senior Advocate Amit Sibal as to whether the interest which the bank was demanding was equivalent to the interest deposited by the bank or more than that. "We're not asking more than that," submitted the Senior Advocate Sibal. "Mr Jindal now you know. You've retained the money & you're saying that you've paid the interest. It is a very unfair and unjust stand to take", remarked Justice Khanna told the PF authority's counsel. Background In 1992, the Central Government held that the PF Act was not applicable to the Federal Bank. Following that, the bank later decided to de-link from the Regional Provident Fund Commissioner's account and formed a separate Trust-"Federal Bank Employees Provident Fund Trust" for PF contributions. As the bank was not held to be covered under the EPF Act, the contributions made from 1985 to 1992 to the PF Commissioner had to be returned to it. Due to delay in getting the amount transferred to the Bank from the PF Commissioner, Bank had raised a dispute with the PF Commissioner. After several correspondence, the amount was transferred to the Bank, 85% initially by cash and then 15% by way of Securities. Since the Commissioner did not pass the eligible interest for the funds retained with PF to the bank, the bank in 1993 approached the Kerala High Court against the Regional Provident Fund Commissioner for release of the entire dues with eligible interest. Para 60 of the Employees Provident Fund Scheme 1952 Para 60 of the Employees provides for payment of interest, to be added on to the account of the employees in the manner specified therein, to generate further interest on the due amount and also as to the fixation of the actual liability in relation to the amount payable under the compulsory bond/securities [15% of the total]. The argument of the PF Commissioner is that the bank is eligible only for simple interest @ 6% as it severed relations with PF Office. Case Before Single Judge of Kerala High Court In 2011, the single judge accepted the bank's claim for payment of interest as stipulated under Para 60 of the PF Scheme on the basis of the statement filed by the Chartered Accountant Commission, fixing the balance as on March 9, 2011 at Rs.46,47,58,357. The High Court also directed payment of the said amount to the Bank within two months. Aggrieved, the Commissioner approached the Division Bench of the High Court. Case Before Division Bench of Kerala High Court The division bench of Justices PR Ramachandra Menon and Anil K Narendran on December 21, 2016 affirmed the findings of the Single Bench regarding calculation of interest by applying Para 60 of the scheme (as prescribed by the Central Government for similar payments) from the due date, till realization. Contempt Petition In Kerala High Court On February 10, 2017, the bank recalculated the total amount due as Rs. 53,51,70,347 after allowing all the deductions allowed to PF Organization by the Division Bench and addressed a letter to the Regional Provident Fund...

EPF Act : Supreme Court To Hear PF Commissioner's Appeal Against Direction To Pay Interest To Federal Bank After 3 Weeks

Shruti Kakkar

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EPF Act : Supreme Court To Hear PF Commissioner's Appeal Against Direction To Pay Interest To Federal Bank After 3 Weeks

Shruti Kakkar

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INR 1099+GST

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