Article (January-2020)


Conducting proceedings under section 7A of the EPF Act

H.L. Kumar

Designation : -   Advocate, Supreme Court

Organization : -  New Delhi


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As a general practice and procedure in such like matters are that first of all, the Enforcement Officer (earlier called as Inspector) after advance notice, will visit the establishment and its records. Afterwards he will file his report before the concerned Assistant/ Regional Provident Fund Commissioner. On receipt of the report, the Regional Provident Fund Commissioner will initiate enquiry under section 7-A of the Employees' Provident Funds & MP Act, 1952, hereinafter referred to as Act, for determination of money due from an employer and/or will also ask the employer to pay the money as due from the establishment on the basis of the report by the Enforcement Officer.  If the copy of the inspection report by the Enforcement Officer is not provided, the employer can demand the same for comments.  While relying upon the judgment in V.S. Murugan vs. The Regional Provident Fund Commissioner, Tamilnadu & Pondicherry, 2012 LLR 37 (Mad. HC), the Madras High Court in its judgment dated 21.10.2019 between the Authorised Officer, Indian Overseas Bank vs. The Employee's Provident Fund Organisation and others has held that section 7-A of the Act provides that no order can be passed without conducting a fullfledged inquiry as if the matter is decided in a civil suit in respect of coverage as well as determination of the amount.  Sub-section (3) of section 7-A of the Act shows that no order shall be made under sub-section (1) of section 7-A of the Act unless the employer concerned is given a reasonable opportunity of representing his case.  Such Officers are vested with powers of a Civil Court while holding the proceedings.

It is pertinent to state here that the Bombay High Court in Sanjeeva Rao vs. C.B.I., 2012 LLR 1116 has held that while holding proceeding under 7-A of the Employees' Provident Fund Act an officer acts as a Judge and entitled to protection under Indian Penal Code and also under section 3(1) of the Judges (Protection) Act, 1985.  Needless to reiterate that in India a judge is treated as God and it is vitally important in a democracy that individual judges as a whole are impartial, independent and neutral of all external pressures and of each other so that those who appear before them and the wider public can have confidence that their cases will be decided fairly and in accordance with the law.  A judge has to observe impeccable integrity, honesty and dependence constantly following them.  Integrity is not being influenced by the identity, gender, political status, wealth or relationship of the party or lawyer.  More basically the courage that he is not doing what he knows to be wrong.  In order to allay the apprehension that the justice may not be meted-out to the defendant due to preconceived view of learned Authority, it is believed that not withstanding any initial partisan observation it is respectfully submitted that the inquiry shall be fair and justice-oriented hence the plaintiff is appearing and would extend all possible cooperation without any prejudice. For correctly comprehending the concept of susceptibility of determination of money under section 7-A of the Act, it is appropriate to produce herein below :

7A. Determination of moneys due from employers.- (1) The Central Provident Fund Commissioner, any Additional Central Provident Fund Commissioner, any Deputy Provident Fund Commissioner, any Regional Provident Fund Commissioner, or any Assistant Provident Fund Commissioner may, by order,-

(a) in a case where a dispute arises regarding the applicability of this Act to an establishment, decide such dispute; and

(b) determine the amount due from any employer under any provision of this Act, the Scheme or the Pension Scheme or the Insurance Scheme, as the case may be, and for any of the aforesaid purposes may conduct such inquiry as he may deem necessary.

(2) The officer conducting the inquiry under sub-section (1) shall, for the purposes of such inquiry, have the same powers as are vested in a court under the Code of Civil Procedure, 1908 (5 of 1908), for trying a suit in respect of the following matters, namely:-

(a) enforcing the attendance of any person or examining him on oath;

(b) requiring the discovery and production of documents;

(c) receiving evidence on affidavit;

(d) issuing commissions for the examination of witnesses, and any such inquiry shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228, and for the purpose of section 196, of the Indian Penal Code (45 of 1860).

(3) No order shall be made under sub-section (1), unless the employer concerned is given a reasonable opportunity of representing his case. 6(3A) Where the employer, employee or any other person required to attend the inquiry under sub-section (1) fails to attend such inquiry without assigning any valid reason or fails to produce any document or to file any report or return when called upon to do so, the officer conducting the inquiry may decide the applicability of the Act or determine the amount due from any employer, as the case may be, on the basis of the evidence adduced during such inquiry and other documents available on record.

(4) Where an order under sub-section (1) is passed against an employer ex parte, he may, within three months from the date of communication of such order, apply to the officer for setting aside such order and if he satisfies the officer that the show-cause notice was not duly served or that he was prevented by any sufficient cause from appearing when the inquiry was held, the officer shall make an order setting aside his earlier order and shall appoint a date for proceeding with the inquiry:

Provided that no such order shall be set aside merely on the ground that there has been an irregularity in the service of the show-cause notice if the officer is satisfied that the employer had notice of the date of hearing and had sufficient time to appear before the officer.

Explanation.-Where an appeal has been preferred under this Act against an order passed ex parte and such appeal has been disposed of otherwise than on the ground that the appellant has withdrawn the appeal, no application shall lie under this sub-section for setting aside the ex parte order.

(5) No order passed under this section shall be set aside on any application under sub-section (4) unless notice thereof has been served on the opposite party.

It will be seen that the powers of Commissioners are very wide similar to adjudication of a suit by Civil Court. For deciding a suit a Civil Court has to follow the procedure as laid in CPC (Civil Procedure Code, 1908) having 650 sections, rules and orders whereas the EPF authority none except to follow the principles of natural justice for determination of money.  Where a liability is disputed, determination of the liability is a condition precedent, for serving a demand on the employer.  When the liability is disputed on the ground that the establishment is not covered under the Act, the Provident Fund Commissioner has to make an enquiry and determine if the Act is applicable to the establishment under the circumstances of that case.  The enquiries have to be attended utmost care and caution since such commissioners though vested with the powers of Civil Court have their leaning towards the department.  In the case of The Authorised Officer, Indian Overseas Bank vs. The Employees' Provident Fund Organisation and Others, 2020 LLR 96 the Madras High Court has held that section 7A of the Employees Provident Funds & MP Act provides that no order can be passed without conducting a full-fledged inquiry as if the matter is decided in a civil suit in respect of cover ability as well as determination of the amount.