EPF Act | Reasoned Order Of Tribunal Waiving Pre-Deposit U/S 7-O Cannot Be Intervened With Unless Palpably Illegal: Himachal Pradesh High Court

The Himachal Pradesh High Court has recently ruled that a reasoned order of a Tribunal while hearing an application seeking waiver u/s 7-O of the Employee Provident Fund Act to deposit the amount as mandated under Sec 7A cannot be interfered with, unless the said order is either without jurisdiction or Palpably Illegal.

Under the Section 7A of the Employee Provident Fund Act, the appeal of the employer cannot be entertained by the Tribunal unless the employer deposits 75% of the amount held due from him.

A bench comprising Acting Chief Justice Ms. Justice Sabina and Justice Satyen Vaidya was hearing a petition preferred by Employer Corporation in terms of which they had assailed an order of Regional Provident Fund Commissioner whereby it had directed the petitioner to deposit 50% of the amount assessed by the Regional Provident Fund Commissioner , Shimla under Section 7A of the EPF Act.

In the instant case the respondent conducted an inquiry under sub-Section (1) of Section 7A of the Employees’ Provident Funds Act, 1952 against the petitioner and held a total sum of Rs 23 Crores due from the petitioner for the period January, 2016 to December, 2018 on account of the liability towards employees provident fund.

Aggrieved of the order, the petitioner preferred an appeal under Section 7-I of the Act, before the Tribunal. Petitioner also moved an application seeking waiver to deposit the amount due from him as determined by the respondent under Section 7A.

Deciding the application of the petitioner under Section 7-O of the Act for waiver to deposit the amount, the tribunal allowed the waiver to the extent of 25% only and directed the petitioner to deposit 50% of the assessed dues with the respondent-authority within three weeks. It was this order that was being Assailed before the bench.

Challenging the order the petitioners submitted that order passed by the respondent, as impugned before the Tribunal, was on the face of it wrong, illegal as the same had been passed without any legal basis as the proceedings were initiated by the respondent under Section 7A of the Act on the basis of a vague, anonymous complaint and the allegations in the complaint remained unsubstantiated.

Depositing a huge amount of more than Rs.11.50 crores approximately will adversely affect the business activity, besides prejudicially affecting the genuine employees as the petitioner Corporation has already been severely affected by the conditions created by COVID-19 pandemic, the petitioner contended.

After anxiously considering the contentions the bench observed that Section 7-O of the EPF Act puts an embargo on the entertainment of appeal by the Tribunal unless the employer deposits 75% of the amount due from him as determined by the Officer referred to in Section 7A.

"The Tribunal is, however, mandated to assign reasons in writing for exercising such discretionary jurisdiction to grant waiver or reduction in the amount to be deposited",the bench underscored.

However the court clarified that the mandate for the Tribunal, to exercise such jurisdiction, is to record reasons in writing, further adding that the Tribunal has to satisfy itself regarding existence of circumstances warranting such exercise and the Tribunal cannot allow waiver or reduction in amount required to be deposited, as a matter of routine.

Observing that in terms of the proviso attached to Section 7-O of the Act, the employer has to satisfy the Tribunal of the reasons to claim waiver or reduction in deposit of amount, the bench pointed that order of Tribunal, impugned by way of instant petition has recorded its reasons for allowing the prayer of petitioner to waive the requirement of statutory deposit to the extent of 25% only.

"This Court while adjudicating upon the order passed by a statutory authority, can interfere only in cases where the order impugned is shown either to be without jurisdiction or palpably illegal. We do not find existence of any of such vices in the impugned order", the bench maintained.

Elaborating further on the matter the bench remarked that since the Tribunal has passed a reasoned order, this Court will not adjudicate upon sufficiently or otherwise of the material behind such reasons unless the reasons are perverse. In exercise of its jurisdiction under Article 226 of the Constitution, Court will not substitute its own reasons for the reasons provide by the statutory Tribunal, said the court.

Noting the fact that the petitioner has not made out any case of its incapacity or inability to deposit the statutorily required amount as ordered by the Tribunal and has alternatively prayed for modification of impugned order by allowing the petitioner to deposit the amount ordered by the Tribunal in the shape of Fixed Deposit Receipt by marking a lien on the said receipt in favour of the Tribunal, the bench said it clearly means that the petitioner has the capacity to deposit the amount as required in the impugned order as the Fixed Deposit Receipt can be procured only against a deposit of the equivalent amount.

In view of the same the bench declined interference and dismissed the petition.

Case Title: M/s Bio Veda Action Research Company Vs The Regional Provident Fund Commissioner-II, Shimla

Citation: 2023 LiveLaw (HP) 22

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