Case Note & Summary
The petitioner, M/s. Utkarsha Vividha Karyakari Sahakari Society, a cooperative society registered under the Maharashtra Co-operative Societies Act, runs a ginning factory at Karasgaon, Amravati. The establishment was initially allotted an EPF code and was paying provident fund contributions. However, the ginning factory closed in the year 2003, and since then, no employees have been working. The electricity supply was disconnected by MSEDCL on 31st August 2003, and all activities ceased. The petitioner's President took charge in July 2015 and attempted to gather documents regarding the closure. The respondents, the Regional Provident Fund Commissioner II and Assistant Provident Fund Commissioner, passed orders dated 28.6.2019 and 6.2.2020 respectively, demanding provident fund contributions and damages for the period after closure. The petitioner challenged these orders by way of a writ petition. The court considered the submissions and noted that the establishment had been closed since 2003 with no employees. The court held that when there are no employees, there is no liability to pay provident fund contributions or damages under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. The impugned orders were quashed and set aside, and the petition was allowed. Rule was made absolute with no order as to costs.
Headnote
A) Employees' Provident Fund - Liability - Closure of Establishment - Sections 6, 14B, Employees' Provident Funds and Miscellaneous Provisions Act, 1952 - The petitioner society's ginning factory closed in 2003 with no employees; electricity disconnected since 31.08.2003. The court held that when there are no employees, there is no liability to pay provident fund contributions or damages under the Act. Impugned orders for recovery for the period after closure were quashed. (Paras 1-10)
B) Cooperative Society - Registration - Maharashtra Co-operative Societies Act - The petitioner is a cooperative society registered under the Maharashtra Co-operative Societies Act, running a ginning factory. The court noted the closure and absence of employees as key facts. (Paras 3-4)
Issue of Consideration
Whether the petitioner cooperative society, whose ginning factory has been closed since 2003 with no employees, is liable to pay provident fund contributions and damages for the period after closure under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.
Final Decision
The petition is allowed. The impugned orders dated 28.6.2019 and 6.2.2020 are quashed and set aside. Rule is made absolute. No order as to costs.
Law Points
- Liability under Employees' Provident Funds and Miscellaneous Provisions Act
- 1952 arises only when employees are employed
- closure of establishment with no employees extinguishes contribution obligation
- recovery for period after closure is unsustainable.
Case Details
2026 LawText (BOM) (06) 255
Writ Petition No.1558 of 2020
Mr. S.M. Vaishnav for Petitioner, Mr. B.A. Kale for Respondent Nos.1 and 2
M/s. Utkarsha Vividha Karyakari Sahakari Society
The Regional Provident Fund Commissioner II, Akola and The Assistant Provident Fund Commissioner, Akola
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Nature of Litigation
Writ petition challenging orders passed by the Regional Provident Fund Commissioner and Assistant Provident Fund Commissioner demanding provident fund contributions and damages for a closed establishment.
Remedy Sought
Quashing of orders dated 28.6.2019 and 6.2.2020 passed by respondents.
Filing Reason
The petitioner society's ginning factory closed in 2003 with no employees, yet respondents demanded provident fund contributions and damages for the period after closure.
Previous Decisions
Orders dated 28.6.2019 by respondent No.1 and 6.2.2020 by respondent No.2.
Issues
Whether the petitioner is liable to pay provident fund contributions and damages under the EPF Act when the establishment has been closed since 2003 with no employees.
Submissions/Arguments
Petitioner submitted that the ginning factory closed in 2003, no employees working, electricity disconnected, and no liability to pay contributions.
Respondents argued for recovery of contributions and damages for the period after closure.
Ratio Decidendi
When an establishment is closed and has no employees, there is no liability to pay provident fund contributions or damages under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.
Judgment Excerpts
In brief the submission of the petitioner is that petitioner is a Co-operative Society registered under the provisions of the Maharashtra Co-operative Societies Act bearing registration No.1012.
It is the case of the petitioner that the establishment of Ginning Factory has been closed in the year 2003. Since then, there are no employees working in the establishment, consequently there was no need to pay any contribution of the employers as per the provisions of Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
The petitioner in support of their submission states that since the year 2003 the Ginning Factory is closed, placed on record the communication of the M.S.E.D.C.L. stating that since 31st August 2003 the electric supply is disconnected to the Society and thereby all activities of Society are stopped till date.
Procedural History
The petitioner filed Writ Petition No.1558 of 2020 before the Bombay High Court, Nagpur Bench, challenging orders dated 28.6.2019 and 6.2.2020 passed by the Regional Provident Fund Commissioner II and Assistant Provident Fund Commissioner respectively. The court heard the matter and delivered judgment on 15.6.2026.
Acts & Sections
- Employees' Provident Funds and Miscellaneous Provisions Act, 1952: Sections 6, 14B
- Maharashtra Co-operative Societies Act:
