Bombay High Court Examines Writ Petitions Challenging EPF Assessment on Municipal Councils as Principal Employers. Statutory Liability Under Employees’ Provident Funds Act for Contractor Workers Subject to Natural Justice and Exemption Under Section 16(1)(c).

Writ petitions challenging assessment orders passed under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952

Petitioners sought quashing of orders passed under Section 7A and Section 8F of the Act and a declaration that they are not liable as principal employers for PF contributions of contractor workers

The EPFO assessed the municipal councils as principal employers liable for PF contributions in respect of workers employed by contractors, and the orders were passed allegedly without adequate opportunity and in violation of natural justice

Assistant Provident Fund Commissioner passed order dated 31.03.2023 under Section 7A assessing liability; order dated 26.09.2023 under Section 8F of the Act

Whether the municipal councils are principal employers liable for Provident Fund contributions of workers employed by contractors under Sections 7A and 8F of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 Whether the orders passed by the Assistant Provident Fund Commissioner violated principles of natural justice due to insufficient opportunity to respond to the Enforcement Officer's Report, including non-supply of annexures and only one day to respond in the lead petition Whether Section 16(1)(c) read with Section 15(1) of the Act bars applicability of the Act to the petitioner establishments because they had applied a General Provident Fund Scheme established by the State of Maharashtra

Petitioners contended that they furnished details of all contractors, including their separate PF code numbers, and therefore liability, if any, lay with the contractors and not with the petitioners as principal employers Petitioners argued that the assessing authority failed to summon or inquire into the contractors despite having their details, and liability was foisted in a summary manner without considering the petitioners' case Petitioners asserted violation of natural justice because the Enforcement Officer's Report was supplied without annexures and only one day was given to respond before the impugned order under Section 7A was passed in the lead matter Petitioners submitted that Section 16(1)(c) read with Section 15(1) of the Act exempts them from applicability of the Act as they had already applied a General Provident Fund Scheme established by the State of Maharashtra, making the enquiry under Section 7A without jurisdiction

Petitioners in all Petitions are Municipal Councils / Corporations, public bodies and an arm of the State Government of Maharashtra. Lis is that assessment is determined under Section 7A of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 on the premise that Petitioner is considered to be principal employer liable for deposit of Provident Fund contribution in respect of workers employed by the Contractors appointed by Petitioner. It needs to be ascertained and seen whether adequate opportunity is given to Petitioners in the present case to furnish its say and explanation on the alleged Enforcement Officer’s Report and whether calculation and computation of outstanding PF amount in the impugned order is done after considering Petitioner’s say on the same and after following the due process of law. From the above 3 dates, she would submit that it is clearly ascertainable that pursuant to submission of Enforcement Officer’s Report dated 29.03.2023, Petitioner was given time for one day only i.e. on 30.03.2023 to furnish its say on the Report. It is submitted that provisions of Section 16(1)(c) place an absolute bar on the applicability of the Act to establishments coming within its purview and therefore the purported enquiry under Section 7A of the Act is without jurisdiction and authority of law.

Summons under Section 7A issued on 21.01.2020 directing petitioner to appear before the Authority for enquiry for period 08.01.2011 to 31.03.2017. Petitioner furnished available information and contractor details. Enforcement Officer's Report submitted on 29.03.2023; copy supplied to petitioner without annexures. Impugned order under Section 7A passed on 31.03.2023 assessing liability of Rs.4,87,50,071. Second order under Section 8F passed on 26.09.2023. Writ petitions filed challenging the orders.

• Employees’ Provident Funds and Miscellaneous Provisions Act, 1952: 7A, 8F, 15(1), 16(1)(c)