Kashish Developers Limited V. Employees Provident Fund Organization and Regional Provident Fund Commissioner-II (Compliance)

WPC/4552/2025

AI Insights

The case involves M/s. Kashish Developers Limited, which sought judicial relief against an order requiring a pre-deposit of 25% of an assessed amount related to Provident Fund dues of contractors' employees. The petitioner argued that the Tribunal's decision was made without proper consideration of the financial evidence and principles governing the grant of stay or waiver. The High Court found that the Tribunal had not adequately considered the petitioner's financial status and the prima facie merits of the case, leading to the decision to set aside the Tribunal's order and remand the case for a fresh decision on the pre-deposit requirement.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 825436 (HC-JHARKHAND)
• Appeal Type: Others
• Pronouncement Date: 03-12-2025
• Assessment Year: misc
• Other Referred Cases: State of Kerala vs. Union of India, Food Corporation of India vs. Provident Fund Commissioner & Ors., Panther Security Service Private Limited vs. Employees Provident Fund Organization & Ors.
• Laws Referred To: Employees Provident Fund and Miscellaneous Provisions Act, 1952
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: RUPESH SINGH
• Assessee Lawyers: SUMEET GADODIA; SHILPI GODODIA; PRAKHAR HARIT
• Keywords: Banking channel; Contractors; Provident Fund Dues; TDS Deduction; Waiver of pre-deposit
• Section: 7(a); 7-O; 7(I)

Judgement Text

" 2025:JHHC:36020 1 IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P.(L) No. 4552 of 2025 M/s. Kashish Developers Limited, (a company registered under the Companies Act, 1956/2013), having its registered office at 87 Old A.G. Colony, Kadru, P.O. Doranda, P.S. Argora, District Ranchi (Jharkhand), PIN 834 003, through its Authorized Signatory cum Chief Financial Officer, namely, Niraj Kumar, aged about 46 years, son of Vishwanath Mishra, resident of 11-A, Saket Nagar, Near Royal Public School, Hinoo, P.O. and P.S. Doranda, Ranchi 834 002 (Jharkhand). … Petitioner Versus 1. Employees Provident Fund Organization, through its Regional Provident Fund Commissioner-II (Compliance), having its office at Bhavishya Nidhi Bhawan, Hinoo, P.O. and P.S. Doranda, District Ranchi-834002 (Jharkhand). 2. Regional Provident Fund Commissioner-II (Compliance), Employees Provident Fund Organization, having its office at Bhavishya Nidhi Bhawan, Hinoo, P.O. and P.S. Doranda, District Ranchi-834002 (Jharkhand). … … Respondents CORAM: HON’BLE MR. JUSTICE DEEPAK ROSHAN For the Petitioner : Mr. Sumeet Gadodia, Advocate : Mrs. Shilpi Sandil Gododia, Advocate : Mr. Prakhar Harit, Advocate For the E.P.F. : Mr. Rupesh Singh, Advocate --- 15 /02.12.2025 1. Heard the learned counsel for the parties. 2. This writ petition has been filed for the following reliefs:- “(i) For issuance of an appropriate writ/order/direction, including Writ of Certiorari, for quashing/setting aside the order dated 24th January, 2025 (Annexure-8) passed by Central Government Industrial Tribunal No. 2, Dhanbad in case No. EPFA No. 29/2024, wherein, the application filed by Petitioner for waiver of pre- deposit under Section 7-O of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter refers to as ‘EPF Act of 1952’for short) has been disposed of by directing the Petitioner to deposit 25% of the amount ordered under Section 7-A of EPF Act of 1952, without even considering the principles of grant of stay i.e. prima facie case, balance of convenience and irreparable loss injury. Printed from counselvise.com 2025:JHHC:36020 2 (ii) For issuance of further appropriate writ/order/direction, including Writ of Declaration, declaring that Appeal filed by Petitioner under Section 7-I of EPF Act of 1952 before the Central Government Industrial Tribunal No. 2, Dhanbad, Case No. 29/2024 is liable to be heard on its own merit without any requirement of pre-deposit in terms of Section 7-O of EPF Act of 1952, especially because the order passed under Section 7-A, on the face of the record, is not sustainable in the eye of law and Petitioner has a good prima facie case, in its favour and even balance of convenience lies in favour of the Petitioner and, further, Petitioner would suffer irreparable loss and injury if stay of waiver of pre-deposit is not granted in favour of the Petitioner. (iii) For issuance of an appropriate writ(s)/order(s)/direction(s) as Your Lordships may deem fit and proper in the facts and circumstances of the case.” 3. The admitted facts of the case are that the Petitioner is engaged in the business of real-estate and is registered under Provisions of Employees Provident Fund Organization under Employees Provident Fund Act, 1952. For the purpose of carrying out its business, Petitioner is having its regular employees and it also engages contractors for labour related works for which Petitioner pays the contractor ‘labour charges’ after deduction of TDS in terms of Income Tax Act, 1961. 4. The dispute pertains to the period April 2016 to March 2020 and it is an admitted fact that during the said period Petitioner discharged the liability of Provident Fund of its employees to the tune of Rs.2,19,87,381/-. However, the Provident Fund dues of the Petitioner in respect of its regular employees was determined at Rs.2,21,98,062.26/- and meager deferential amount of Rs. 2,10,681/- was determined due to some error in computation of the Petitioner. The said amount is not in dispute. 5. However, for the said period April 2016 to March 2020, Area Enforcement Officer alleged non-compliance against Petitioner towards discharge of Provident Fund dues in respect of labour charges which were Printed from counselvise.com 2025:JHHC:36020 3 paid to the contractor. It was the case of the Enforcement Officer that Petitioner employed contractors and paid them labour charges and claimed deduction of the said amount as expenses in its Profit & Loss Account but had not discharged the liability of Provident Fund in respect of the same. 6. Per contra, it was the Petitioner’s case that all payments made to contractors were through banking channels and contractors were duly registered under the Provision of the EPF Act, 1952 and thus, it was their responsibility to discharge the liability of Provident Fund of its employees and there were no employee and employer relationships in respect of labours engaged through the contractor. 7. An adjudication order under Section 7-A of EPF Act, 1952 was passed against Petitioner on 28.06.2024, wherein in respect of non-payment of EPF dues of employees working under the contractor, an amount of Rs. 12,49,23,617/- was determined by Regional Provident Fund Commissioner-II. Against the aforesaid order Petitioner preferred statutory appeal under Section 7-I of the EPF Act, 1952 before the Central Government Industrial Tribunal No.2 at Dhanbad which was registered as Case No. EPFA 29 of 2024. Along with the said appeal, Petitioner filed an application under Section 7-O for waiver of deposit of the amount alongwith separate application for stay of adjudication order. 8. Central Government Industrial Tribunal No.2, Dhanbad in EPFA No. 29 of 2024 passed an order dated 22.08.2024 in respect of application under Section 7-O of the Act, wherein Petitioner was directed to deposit 30% of the Printed from counselvise.com 2025:JHHC:36020 4 adjudicated amount and on deposit of the said amount it was ordered that there shall be stay of impugned order. 9. Petitioner challenged the aforesaid order by filing a writ petition before this Court being W.P.(L) No. 5555 of 2024 on the ground that the said order has been passed without considering the application under Section 7-O on merits and without adhering to the principles of grant of stay/waiver i.e. prima facie case, balance of convenience and irreparable loss and injury to the Petitioner. This Court vide its judgment and order dated 23.04.2024 has set aside the order dated 22.08.2024 passed by CGIT No. 02, Dhanbad, by holding inter-alia that the said order was a non-speaking order without even considering the three factors which are required to be looked into for grant of waiver/stay. 10. Consequent upon remand order passed by this Court, Petitioner filed written arguments before the tribunal and alongwith the said written arguments a certificate of Charted Accountant was annexed showing the financial status of the Petitioner as per last audited balance sheet dated 31.03.2024. 11. However, the Tribunal again vide order dated 24.01.2025 passed an order directing the Petitioner to deposit 25% of the assessed amount under Section 7 of EPF Act. Being aggrieved by the said order, present writ petition has been filed. 12. Mr. Sumeet Gadodia, Counsel appearing for the Petitioner has vehemently submitted that despite remand order passed by this Hon’ble Court, wherein it was clearly observed that the earlier order was ex-facie non- Printed from counselvise.com 2025:JHHC:36020 5 speaking and without any reason; again, an order in similar fashion has been passed by Tribunal wherein the earlier amount of pre-deposit of 30% has been reduced to 25%. By referring to the impugned order, it was submitted that the said order is again a non-speaking order where the three facets of grant of stay/waiver has not at all been considered and order has been passed by merely recording inter-alia that in the last Audit Balance Sheet dated 31.03.2024 of the Petitioner, petitioner is having fixed assets of Rs.17.75 crores. It was vehemently submitted that certificate produced by the Charted Accountant was only considered in part to the extent of fixed assets of the Petitioner whereas from the said certificate itself it would be evident that the Petitioner was having a nominal cash balance of Rs.17.11 lakhs and a loan amount of Rs.293.37 crores. 13. Extensive reliance was placed upon a recent decision of the Hon’ble Supreme Court in the case of State of Kerala vs. Union of India reported in (2024) 7 SSC 183 and it was contended that the Tribunal was obligated to consider the prima facie case of the Petitioner which was not considered by it, and, in a mechanical manner order of pre-deposit/waiver was passed. Petitioner vehemently submitted that it made all payments to its contractors including security agencies through banking channel and even furnished details of the contractors to the Adjudicating Authority. However, Adjudicating Authority without even conducting any enquiry from the contractors who were registered under EPF Act proceeded to pass the adjudication order fastening liability upon Petitioner. Reliance in this regard was placed upon the decision of the Hon’ble Supreme Court in the case of Printed from counselvise.com 2025:JHHC:36020 6 Food Corporation of India vs. Provident Fund Commissioner & Ors. reported in (1990) 1 SCC 68, wherein Hon’ble Supreme Court held that it is the duty of the Adjudicating Authority before the determining the amount payable under the EPF Act to collect relevant evidence. 14. Further reliance was also placed upon the decision of the Hon’ble Supreme Court in the case of Panther Security Service Private Limited vs. Employees Provident Fund Organization & Ors. Reported in (2021) 1 SCC 193 to contend inter-alia that the Hon’ble Supreme Court has clearly held that it is the responsibility of the contractors who deploy security guards to get self registered under the EPF Act and to discharge the liability. In view of above stated facts, it was submitted that impugned order directing for pre-deposit of an amount of 25% is liable to be set aside and the Tribunal should be directed to hear the appeal on its own merits. It was submitted that Petitioner would extend proper co-operation for adjudication of the appeal and a time limit may be fixed by this Hon’ble Court for the Appellate Authority to hear and dispose of the appeal itself. 15. On the contrary Mr. Rupesh Singh, Advocate appearing on behalf of Respondent Employees Provident Fund Organization objected to the prayer made by the Petitioner. It was submitted that the Petitioner has already approached the Appellate Court and thus, it is not open for the Petitioner to raise issues on merits before this Hon’ble Court regarding legality and propriety of the adjudication order. It was submitted that Appellate Tribunal at the stage of consideration of application under Section 7-O cannot consider the merits of adjudication order, as if the merits of adjudication order is Printed from counselvise.com 2025:JHHC:36020 7 considered at the stage of waiver of pre-deposit, the same would be pre- judicial to both the interest of the Petitioner and Respondent organization and thus, rightly the Appellate Authority has not considered the merits of the adjudication order for determining the quantum of waiver of pre-deposit. Reliance was placed by the Respondents upon Paragraph 4 of the counter affidavit to contend inter-alia that EPF Act is a beneficial legislation for providing social security to employees and any effort by the employer to deny employees the legitimate dues cannot be encouraged. Reliance was placed upon the decision of the Hon’ble Supreme Court in the matter of RFFC vs. Shibu Metals Workers reported in (1965) 2 SCR 72 to contend that while construing the provisions of an Act, if two views are reasonably possible, the Court should prefer the view which helps the achievement and furtherance of the object of the Act. Further, by relying upon several paragraphs of the counter affidavit, submissions were made to justify the adjudication order by contending inter-alia that the Petitioner being the Principal Employer, responsibility to make payment of the dues of the contractor in the event contractor failed to pay the said dues, is upon Petitioner. Accordingly, it was prayed that the writ application may be dismissed. 16. Having heard the Ld. Counsel for the parties and upon perusal of the records, in the opinion of this Court the question for adjudication involved in the present writ application is the scope and ambit of the powers which can be exercised by the Appellate Tribunal under Section7-O of Employees Provident Fund Act, 1952. Printed from counselvise.com 2025:JHHC:36020 8 17. For the sake of ready reference Section 7-O of the Act is quoted herein under:- “7-O. Deposit of amount due, on filing appeal – No appeal by the employer shall be entertained by a Tribunal unless he has deposited with it seventy-five per cent of the amount due from him as determined by an officer referred to in section 7A. Provided that the Tribunal may, for reasons to be recorded in writing, waive or reduce the amount to be deposited under this section.” 18. A bare perusal of the said provision could reveal that no appeal by the employer is to be entertained by Tribunal unless 75% of the amount due as determined under Section 7A is deposited. However, the proviso to the said Section enables the Tribunal for reasons to be recorded in writing to either waive or reduce the amount to be deposited under this Section. Thus, the Tribunal not only has the power to reduce the amount of pre-deposit but also to waive it completely by recording reasons. 19. The next question thus, arises is as to under what principles, such power of waiver or reduction of pre-deposit is to be exercised by Tribunal. In the opinion of this Court the Tribunal while exercising such powers is to be guided by globally acknowledged golden principle, collectively known as “the triple-test”, followed by Court across the jurisdiction regarding the prerequisites before a party can be granted stay/waiver by a Court. These three cardinal factors, are deeply embedded in the Indian jurisprudence as well, namely, i. A “prima facie case”, which necessitates that as per the material placed on record, the plaintiff is likely to succeed in the final determination of the case; ii. “Balance of convenience”, such that the prejudice likely to be caused to the plaintiff due to rejection of the interim relief will be higher than the inconvenience that the defendant may face if the relief is so granted; and iii. “Irreparable injury”, which means that if the relief is not granted, the plaintiff will face an irreversible injury that cannot be compensated in monetary terms. Printed from counselvise.com 2025:JHHC:36020 9 20. From the facts of the case, it would be evident that Petitioner specifically pleaded before the Adjudicating Authority, that it made payment to contractors including security agencies through banking channel and deducted TDS under I.T. Act, 1961. Even Statutory Form 16A evidencing proof of deduction of TDS was filed. It was the duty of the Adjudicating Authority to collect relevant evidences including issuing notices to the contractors regarding deposit of EPF amount, but, from the adjudication order, it appears that the said exercise has not be under taken. The Hon’ble Supreme Court in the case of Food Corporation of India (supra) held as under:- “7. The question, in our opinion, is not whether one has failed to produce evidence. The question is whether the Commissioner who is the statutory authority has exercised powers vested in him to collect the relevant evidence before determining the amount payable under the said Act.” 21. Further Hon’ble Supreme Court in the case of Panther Security Service Private Limited (supra) while determining the liability of security guard agency has held as under:- “11. We have no doubt in our mind that the appellant is engaged in the specialized and expert services of providing trained and efficient security guards to its clients on payment basis. The contention that the appellant merely facilitated in providing chowkidars cannot be countenanced. The provisions of the 2005 Act make it manifests that the appellant is the employer of such security guards and who are its employees and are paid wages by the appellant. Merely because the client pays money under a contract to the appellant and in turn the appellant pays the wages of such security guards from such contractual amount received by it, it does not make the client the employer of the security guard nor do the security guards constitute employees of the client. The appellant, therefore, is squarely covered by the Notification dated 17-5-1971.” 22. Thus, in the opinion of the Court the Petitioner has good prima-facie case in its favour which was required to be considered by the Appellate Tribunal which it failed to do. 23. Apart from the above, from the order passed by the Appellate Tribunal, it would transpire that Appellate Tribunal has only selectively taken into consideration the Charted Accountant certificate produced by Petitioner Printed from counselvise.com 2025:JHHC:36020 10 for audited balance sheet dated 31.03.2024, inasmuch as, only the fixed asset of the Petitioner was considered and other aspects were ignored. The Charted Accountant certificate contained at page 161 of the writ petition is reproduced herein as under:- “This is to certify that M/s Kashish Developers Limited, having Registered Office at Kadru, Ranchi-834002 have following data as per the last Audited Balance sheet dated 31.03.2024 in respect of following- 1) Cash and Bank Balance – Rs.17,11,779.35 2) Building Owned by Company – Nil 3) Fixed Assets – Rs.17,75,34,104.08 4) Loans Amount – Rs. 2,93,37,95,512.43 5) Yearly Salary to staffs – Rs.5,13,09,134.07 This represents that the Financial Position of the Company is poor.” 24. From the said certificate, it would be evident that the Petitioner was having a negligible cash balance for the year ending 31st March, 2024 and was having loan amount of Rs.293.37 crores and it was opined by the Charted Accountant that the financial position of the Company is poor. If the aforesaid aspect would have been considered by the Appellate Tribunal, it would have been in a better position to Judge as to whether any pre-deposit is to be made by Petitioner. However, unfortunately, the said aspect has not been considered. 25. So far as the issue regarding the balance of convenience is concerned; the Appellate Tribunal itself recorded that Petitioner has fixed assets of Rs.17.75 crores and thus, Petitioner cannot be termed as a fly by night company tilting balance of convenience in favour of Respondent Organization. This aspect has also not been considered by the Appellate Tribunal. 26. In view of the aforesaid cumulative facts and circumstances of the case, this Court is of the opinion that the impugned order dated 24.01.2025 passed by Central Government Industrial Tribunal No. 02, Dhanbad in EPFA Printed from counselvise.com 2025:JHHC:36020 11 Case No. 29 of 2024 is not sustainable in the eye of law and is accordingly, set aside. The Tribunal is directed to reconsider the matter of pre-deposit. However, interest of justice would be served if Tribunal hear the appeal itself on its own merits within a stipulated period for which the Petitioner has also undertaken to extent co-operation. 27. Accordingly, it is ordered that EPFA case No. 29 of 2024 shall be heard and decided by the Central Government Industrial No. 2, Dhanbad at the earliest and/or pass an appropriate order on the petition filed by the Petitioner under Section 7-O of the Employees Provident Fund and Miscellaneous Provisions Act, 1952. 28. With the aforesaid observations and directions, the instant writ petition is disposed of. Pending Interlocutory Application, if any, stands disposed of. However, in the facts and circumstances of the case, there shall be no order as to cost. (Deepak Roshan, J.) November 02, 2025 Amardeep/ A.F.R Uploaded on 03 /12/2025 Printed from counselvise.com "